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If something took me diagnosis/bench time but the client didnt want it fixed (or its unfixable) |
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If its the clients fault (obviously) |
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When not to charge:
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If whatever happened is my fault |
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If I cannot fix something due to my lack of knowledge in the area |
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If I didn’t do it right the first time and have to do it again |
Unfortunately, the “should I charge or not?” question sometimes falls into a grey area. Here are two examples of my own that fell into a grey area:
A few days ago I had a call from a client whom I setup a network printer for about 6 months ago but the printer was no longer working. I went out there and discovered that the printer had obtained a new IP address from the router but all the computers still thought that the printer was still at the old IP address. This would definitely be my fault but it turns out that the client had seriously messed with the network setup at some point swapping plugs and changing settings. This leads me to mention another rule I have: If I client makes their own changes to my working setup. I will charge them if they break it.
It was a relatively quick fix as all I had to do was manually set the IP address of the printer rather than use the default setting of having it automatically obtain the IP from the router. This should stop the printer from changing its IP address again.
So, should I charge for this one? The client did mess with the setup which could have easily caused it to stop working so I should charge. However, I felt that this problem would have eventually happened anyway as I didnt predict that the IP may change one day.
I also gave the client the benefit of the doubt that
they messed with the network after the
printer changed IP’s in order to troubleshoot. I’ll
never know if they did something to screw it up, but
I felt this problem would have probably happened
anyway so after I fixed it I didnt charge the
client.
My other grey area story was about two months ago I had a client whos laptop wouldnt boot into Windows. It turns out that the hard drive was dead but she desperately needed the information that was on it. So, I hooked it up to my data recovery system which took about 15 minutes, started the recovery but it couldnt read the drive.
I tried various settings with this application but was still unable to read anything off the drive. I then tried a setup and a different data recovery application and could read some of the data on the drive but it was going terribly slow. I left this running for about a day and a half and managed to get about 31,000 files. When it finished I looked at what was recovered and it turns out it was just the "temporary internet files" folder which is obviously not the critical files they were after. I burnt these files to a CD anyway and replaced the parts/operating system for the laptop.
I wondered whether I should charge for the data recovery since it did take a fair bit of my time. In most cases, if something took me time but was unfixable or the client didnt want it fixed, I would still charge them for my diagnosis/bench time. However, in this case I decided not to because I didnt retrieve anything of value and I was already getting paid for the replacement harddrive and OS install time. This client was also a good client who I have earned over $1000 from in past jobs.
It is a good idea to have like the ones I mentioned above, but occasionally you need to bend them a little like in my second story. There is no point being a penny richer and a dollar poorer.
About the author: Bryce Whitty is a Professional Computer Technician who started his business when he was 17 year old. Bryce writes Technibble articles about Business How-to's and stories from "the trenches".
Article Source: Technibble.com
by Andrew Bimbo
Small businesses are crucial to our economy. Small businesses are an important source of job growth. Small businesses account for a large majority of jobs in start-ups, a key source of innovation and economic growth.
Here are some tips on how to manage a small business in a recession—stay lean, talk to your customers, and don't stop hiring and marketing, get listed in a business directory so you can be found. To keep your company lean, you should set and measure inventory targets and keep in daily or weekly communication with your sales and operations staffs. You may also want to weed out unprofitable customers (BusinessWeek.com, Oct./Nov., 2007). Every company has customers that cost more than they add to the bottom line. Identify them, evaluate how to make them profitable customers, and if that's not possible, politely hand them to your competition.
To keep from losing business, keep in close touch with your customers by networking with them regularly. Show that you care. Understand how their business is being affected and look for ways you can help. Lasting relationships are built in hard times. And look for new market opportunities, recognizing that when the business climate changes, customer needs will change as well. That may mean new markets will open up for you.
Develop strategies to land more customers. I counsel my clients that if they want to make their companies grow they will have to steal customers from their competitors, period. The pie is shrinking. For the auto repair shops, cars are more reliable and need less frequent service. In the restaurant world there's been overbuilding and the average number of meals eaten out has declined for the first time in a number of years. The successful small business is going to have to win a bigger share of that shrinking pie. The way to do that, particularly for small businesses, is to get listed on the business directory and use effective marketing solutions to generate sales leads for your business. Make sure you give every customer the best experience you can. That means clean restrooms, courteous staff, eye contact, handshakes. You've got to do this better than the other people out there. Another good option for local businesses is community involvement. Join a business networking group or the Chamber of Commerce. Sponsor a Little League team. Let the Girl Scouts do a car wash in your parking lot. This is part of bonding with your community and becoming an established part of it.
Nikita is passionate about small business leads and its positive impact on local communities and the overall economy. Feel free to subscribe and join my favorite small business resource and networking site:
http://www.tradeseam.com/smallbusiness/leads/small-business-leads
Article Source: Free-Articles-Zone.com
Make your business proficient
with outsourced accounting
Outsourced accounting has become the order of the day for many business enterprises due to its proficiency and accuracy that lead to churn out more profits day by day.
With the ongoing revolution in the field of information technology, outsourcing for various business needs has become necessary and important. The basic need or objective of any business is to earn maximum profits. Hence, to tackle and handle the financial records, many organizations are turning towards outsourced accounting for its professional services. It has eventually become the order of the day of any business as it curbs losses as well as provides real-time solutions.
Outsourced accounting is perhaps going down well with various sizes business enterprises. The main goal of such accounting services is to provide business management services that focus on various important aspects that are crucial to businesses at any given day. Therefore, it is all about keeping the business records well intact and running forever. Apart from accounting, it also focuses on taxation and other related legal outsourcing services. With the help of accounting services, companies or businesses can look forward to a wide spectrum of strategies that are simple and practical to incorporate. These strategies are structured in a way that it captures the strengths and advantages of core competence at various levels.
Any person who is dealing with the financial data sometimes faces problems due to the lack of time and resources and can make mistake while keeping those numbers intact. Moreover, taking care of financial records is not a child’s play and can be tiresome for many, as it requires full attention and expansive resources. Yet, you cannot do without these numbers, as they are the backbone of any business and moreover, the business owner will not mind ever-growing numbers at any point of time. The sole aim of any business is to earn more and more profits and simultaneously curbing the losses incurred if any. In fact, you can say that the primary rule for any business to succeed is to keep the incomes high while minimizing expenses. Outsourced accounting services therefore plays a significant role in every small and large business, as the accounts department is an integral and significant part of the company. That is the reason many companies are trust outsourced accounting services.
Hence, hiring outsourced accounting firm is a good idea, as it not only provides effective work but also decreases the burden on the person dealing with the accounts. In fact, many small and large companies have realized the importance and reality of outsourcing the accounts job as it cuts down the money and time, both simultaneously. With the introduction of accounting software, many organizations are able to find out the current financial trend and are able to rectify the drawbacks of their businesses if any. Thus, outsourced accounting has become a significant part of various companies for profitable reasons. With the help of outsourced accounting, a businessperson or his employees will be able to get a clearer picture of his business in the terms of profits earned and losses incurred. Moreover, he or she will be able to have information on the position of business in the market. As financial records is the mirror to the soul of any business.
Author Information:
Michelle Barkley is a CPA who advises people on tax preparation and tax calculation. She specializes in Bookkeeping outsourcing, Tax return preparation, back office outsourcing and Outsourced Accounting . To know more about Accounting outsourcing services and to use the services visit http://www.ifrworld.com .
article Source: Article99.com
Small Business Finance the Smart Way
Are you a small business owner? If you are, you’ll know that running a small business is one of the most difficult things you’ll ever do in your life. You’re the company’s spokesperson, owner, founder, advertiser and investor. You are its inspiration. It is your livelihood and your passion. And like all passions it is all consuming.
It has you crunching numbers when you should be sleeping. It has you sketching out ideas on napkins in restaurants when you should be eating. But like any love affair the irritations are worth it. You know that almost nothing in your life can match the highs that your business gives you. So stick with it! Give your business all your heart and soul. But be sensible when it comes to your cash.
Business Finance.
Starting your business can be incredibly costly. Buying the machinery, renting the premises, purchasing the advertising space… well you get the picture, you’ve been there. You are also probably aware that the cost of kicking your business into life is so high it can affect your businesses ability to grow later on down the line.
You’ve established yourself as a great business; you know you have the ability to expand and to grow. But you just don’t have the cash to do it. But what is the best way to get that much needed cash injection? You don’t want to be taken for a ride. This is why you need to know about business finance.
Small Business Cost.
The first thing to do when you start investigating small business finance is to look carefully at what you want to achieve. Having clear goals is one of the basic rules of success in business. If you are going to borrow money to support your business you must have a clear aim in mind. That way you can easily track the success of any investment and see how much, making your small business grow will cost. So, determine what you want. Are you purchasing assets, such as land or machinery, or stock? Or are you looking to improve your market position through advertising, or expand into new markets? Whatever you’re doing be clear about your goals.
Small Business Finance.
There are two types of small business finance available to you. The first is the more traditional and common form, known as ‘debt finance’. This involves your company lending money from a financial institution, usually your bank. There are up sides to this deal, you get your cash and you keep all your business. You do have to pay more back than you borrowed in the first place, with the onus on you to repay as soon as possible.
However, if you have clearly identified a use for your money this should present no problem to you and allow you to expand quickly. This is why it is the route taken by the majority of small businesses. If you fail to pay back the money you have borrowed however the consequences are severe, as part of the agreement will involve collateral. Often, this could be your house.
A less common option is that of ‘equity finance’. Ever seen the TV show Dragon’s Den? Then you’ll know what I’m talking about. Equity finance is when an investor gives you the cash you need and in return you give him a share, or a stake of your business. As the investor has no assurances, unlike the bank, he or she requires a much greater pay off if things go well. They want some of those profits! However if things don’t work out, you won’t be sleeping in the streets!
Your Future.
So there are plenty of ways you can offset your small business cost. Small business finance is easy to get if you pitch correctly and your business is heading in the right direction. Whichever mode of business finance you choose make sure you keep following the dream and your passion might end up making you millions.
George Butler is a successful businessman who believes in utilising your finance resources to the best of your abilities. His areas of interest are online business marketing and technology resources to help business grow. Find out more australian business directory and small business productivity tools today.
Article Source: ArticleRich.com
Are Your Financial
Decisions Becoming Stale? Here are 3 Fresh Tools to
Help!
by Bruce Hokin
Profitable financial decisions are the very life-blood of vibrant businesses. These decisions can cover asset replacement/repair options, investment choices, advertising options, business directions, new product development and introduction and innovative work practices. These decisions all have a positive or negative impact on the viability and health of the business. Would your business be more successful if your decisions were freshened up?
There are many tools advertised to assist managers make better decisions. One of the most efficient ways to make a positive impact on tired decisions is to develop more options. More options will definitely help you make better decisions since you have more choices available. The 3 tools listed below are some of the most popular and easy to use.
Are you ready? Let's do it.
Fresh Tool #1. Random Input
This is the simplest of all creative thinking techniques. It is widely used by advertising agencies, new product teams, rock groups, playwrights, IT developers and many others. This tool was developed by Dr. Edward De Bono in 1968 but has been plagiarized and borrowed since then, often by folks who don't really know how to use it.
One way to use this technique is to compile a list of 60 words (e.g. tiger, nose, hamburger, plane, molecule, rubbish, dog, shoes etc). When you need a random word glance at your watch and note the seconds reading. Use that number to get a word from your list. We then use one of these words that has no connection with the situation and hold them both together. The mind is very powerful at linking these seemingly unconnected ideas together.
In Dr. De Bono's book "Serious Creativity" he offers the following illustration:
"Cigarette" linked with "Traffic Light". "Within a few seconds this led to the idea of printing a red band around a cigarette some distance from the butt end. This band would serve as a 'danger zone'. If you stopped smoking before you reached the band, your smoking would be safer (because the last part of the cigarette is more harmful)."
This also led to the idea of putting seeds in the butt of the cigarette so that when it was thrown away in a garden or park, flowers would grow out of the butt end.
Do you feel that you have completely run out of ideas and your usual ways no longer work well? Does it seem impossible to get new ideas? Put in a random word and it will open up new lines of thought immediately.
Fresh Tool #2. Six Thinking Hats
This is another of Dr. De Bono's tried and tested methods. Again, it is extremely simple, but powerful. This method has been used by IBM, Prudential, Nippon Telephone and Telegraph and many other businesses world-wide.
The theory is as follows:
The Six Thinking Hats allows one to get away from the Western tradition of argument that says 'A' has a point of view but 'B' disagrees. There are six hats, each designed to represent a way of thinking about a problem.
White Hat - think of white paper - neutral - carries information, data and information
Red Hat - think of fire and warmth - feelings, emotions, hunches and intuition
Black Hat - think of stern judge - black robes, black hat is for critical judgment
Yellow Hat - think of sunshine - optimism, feasibility and how things can be done
Green Hat - think of vegetation and rich growth, creative thinking, new ideas, additional alternatives
Blue Hat - think of blue sky - overview, process control, sets agenda for thinking, summaries, conclusions
Both 'A' and 'B' can wear the black hat at the same time to find the dangers in an idea. They can both wear a Yellow Hat to to explore the benefits. That way all members of the discussion can be thinking in the same way for a period of time without the need to argue and take sides. The organizer can decide when to change the hats and all agree to abide by his/her rulings.
Fresh Tool #3. S.C.A.M.P.E.R.
Apply SCAMPER to the problem you wish to solve or your specific situation.
You can use each of the letters of this word SCAMPER as follows:
S – Substitute (can you apply something else)
C – Combine (can you mix in something, add)
A – Adapt (can anything be changed, modified)
M – Modify, Magnify, Minimize
P – Put (to other uses)
E – Eliminate (one or more of the elements)
R - Rearrange, Reverse, Redefine
These 3 tools are only the tip of the iceberg. One reference on the Internet counted over 250 creative thinking methods from just 13 books! These 3 may just spark your interest in studying more deeply into this fascinating subject.
This study is not just for fun, it can also really assist in helping you make better financial decisions by being able to marshal more ideas, options and ways of doing things and then applying them to the financial decisions at hand.
Author Information:
Bruce Hokin is an experienced accountant (FCPA) specializing in Cost Benefit Analysis. You can find more of his in-depth FREE articles, FREE Newsletter and e-zines at his website. To sign up for his downloadable Cost Benefit Analysis training program "5 Steps to Cost Benefit Mastery" just go to his website. You could be using this technique in under 2 hours! Available at www.thecostbenefitcoach.com
Article Source: Article99.com
by Stephen Bush
Most of us would like to view our banker as one of the family, and for most small business owners, the idea of "when to fire your banker" has probably never occurred to them. The average business owner is happy to have one less decision to make, so thoughts of firing their banker rarely become a top priority in the realm of working capital financing and SBA loans.
Banks are just not what they used to be (as most of us have by now realized). It seems like almost overnight banks have lost most of our confidence in a way that is similar to many automobile manufacturers that are now a shriveled and tarnished version of what they once were. In this shifting reality, business owners are now forced to adapt quickly to a changing environment for small business loans. Candidly speaking, even if their commercial banker is their best friend, small business owners are increasingly realizing that they must look out for their own best interests because it is unlikely that their business banker is up to the task anymore.
While this assessment might seem cold and harsh, it is nevertheless a candid and practical evaluation of current circumstances. Unwinding a long-term relationship with a particular bank or banker is likely to produce some of the same trauma that occurs when any positive relationship suddenly goes sour. In such circumstances, we should try to move forward after doing the best that we can. As in any change-related decision, the decision-maker (in this case, the business owner agonizing over the firing of their banker) should openly evaluate the probable consequences of not changing at all. If they are being truthful to themselves, most business owners will conclude that they should seek a new banker if keeping the old banker is holding the business back, either by bad advice or inadequate small business loans.
This discussion is in no way meant to suggest that all banks are now bad or that all bankers are now bad. In today's complex economy, there are still good banks as well as bad banks. Of course there are similarly both bad bankers and good bankers. When their current banking relationship involves a bad banker working for a bad bank, this is probably the worst-case scenario to confront for most commercial borrowers.
We will leave the discussion of good banks and bad banks to another report. Business owners should consider the following remarks when determining if it might be time to find a new banker.
The most prudent outcome for a business owner is likely to be firing both the bank and the banker if the current situation involves a bad bank and a not so bad banker. Sometimes a good banker can be transformed into a bad banker simply by working for a bad bank. Many banks have suddenly stopped making normal business loans and working capital loans, often without even explaining why. This can force an otherwise good banker to rationalize the actions of the bank in a way meant to keep the business owner as a customer while at the same time asking them to accept sub-par business financing. Just say no.
One of the most predictive signs of a bad banker is an increasing frequency of situations in which they are unable to achieve the results which were promised or suggested. This could include lowering a business line of credit after suggesting that it would either be increased or held at the same level. Another common illustration is based on circumstances in which the banker reports that they recommended a commercial loan for approval but the bank loan committee turned it down. Business owners should not be reluctant to hold their banker accountable for producing inadequate results, since results are what count for any business. For prudent commercial borrowers, firing your banker and your bank has become both a more acceptable and necessary solution when your business is not able to obtain sufficient business finance and working capital help.
Stephen Bush is a business/government advisor and small business loans expert. Steve has provided candid advice to business owners for more than 25 years => The Working Capital Journal - AEX Small Business Finance Programs
Article Source: ArticleRich.com
Don't know your debits from your credits? Here's a quick primer on how basic bookkeeping works and an easy way to understand debits and credits.
Don't know your debits from your credits? Here's a quick primer on how basic bookkeeping works and an easy way to understand debits and credits.
First, know that debits are not "deductions" and credits are not "increases". Debit and credit are the names of the columns on bookkeeping ledgers (debit is the column on the left and credit is the column on the right).
In double entry accounting (bookkeeping) the sum of each column must equal the other. In other words, the sum of all of the debits must equal the sum of all of the credits. By making sure that the sum of each column equals the other, the bookkeeper can eliminate arithmetic errors.
To make an entry, the bookkeeper makes one or more entries on the debit side of the ledger (debits) and one or more entries on the credit side (credits). All entries are positive numbers and debits must equal credits.
Into which column do you place any particular entry? A simple way to remember is that the accounts that represent your money increase with debits and decrease with credits. All other accounts are the reverse - they increase with credits and decrease with debits.
What are the "money" accounts? Those that represent actual money (cash, accounts receivable, etc.); assets (inventory, equipment, etc.); and, expenses (basically money that you've spent with others). In other words, assets and expenses are debit up, credit down - otherwise it's debit down, credit up.
As an example, you start your business with $10,000 with which you open a business checking account. Your first bookkeeping entries would be to debit the account "checking account" (making it go up) and credit the account for paid in capital (making it go up as well).
You make your first sale for $1,000 worth of services. The customer paid cash which you deposit into the business checking account. You would credit an account which represented sales $1,000 and it would increase in value. You would offset that entry with a $1,000 debit to the account "checking account" and it would also increase in value.
The end of the month comes along and you write a check to pay your electric bill. You would debit the expense account for utilities and increase its value. To offset that entry, you would credit the account "checking account" and it would decrease in value.
Remember, debits can increase account values and credits can decrease them - which is which depends on the account type.
While bookkeeping can seem confusing it quickly becomes easy with practice. Basic bookkeeping is the foundation of financial reporting. Gaining comfort with it will allow you to manage more effectively your business.
Author Information:
Dave Miller is a business consultant with 27 years experience writing business plans. He is also the creator of FundablePlans business plan software.
Article Source: Article99.com
If you operate your own business, particularly you run a business from your home, you probably already know that you have a large amount of deductions at your disposal. Are you familiar with all of them? If not, let’s take a look at some key deductions you don’t want to miss.
If you purchase business supplies, please note that these items can be deducted. They include: office supplies, pens, business cards, and the like.
Your home office is deductible, particularly if you have a room dedicate exclusively to an office such as a spare bedroom. Consult a tax accountant if you are not certain about your eligibility, but if you have such an office then you also have a nice deduction to take advantage of.
Online advertising, print advertising, and radio or television spots are tax deductible too. If you use Google Ad Words to market your business, the cost of running this program is deductible.
Phone service, long distance in particular. If you use your personal phone for business calls you can deduct the long distance calls that are related to your business. Your internet access is also deductible whether you use cable or phone service.
Business computer. That business computer you purchased can be depreciated over three year’s time. Other depreciable equipment can be deducted as well.
Association fees, magazines. Any association that you belong to or magazines you subscribe to related to your business can be deducted.
Banking fees. Monthly bank fees and service charges are deductible.
Mailing costs. Postage and related mailing expenses are tax deductible. If you have a post office box, make certain that you deduct that fee too!
Prizes and other give-a-ways. Part of doing business is giving away prizes and other freebies to clients. Keep track of all of your donations as they can be deducted too. If you sponsor a community event, a little league team, or some other local project you may be able to take a deduction there as well.
Chances are there may be additional deductions that you haven’t thought of. If you use your car for business, then keep track of mileage, maintenance and repairs, tolls, and gas as the business related part of these expenses could be deductible too.
Yes, working for your self has many benefits related to it. Keep track of all of the above mentioned deductions and you can trim or eliminate your taxes accordingly.
Author Information:
Jeff Lakie is a freelance finance writer, His website The Tax Guide is a great place to find out more about who can help me when i owe back property tax. Visit his site today and find out more.
Article Source: Article99.com
It is essential for all the business owners to discern how profitable and money making they are at anytime. In today's world of business the conventional ways of annual accounting is certainly inappropriate and particularly when it comes to securing success for small businesses, small business accounting is of utmost importance.
Nevertheless, the financial matters which are linked with small businesses are quite different from that of large or huge business houses and understating these matters as well as accounting is extremely crucial for the appropriate administration of the small businesses. This understanding further leads to right allocation of acknowledgment, correct business activities, suitable use of funds, enhanced decision making and apt evaluation of the competitors.
The Small Business Accounting essentially includes three major financial measures- Profit and Loss Statement, Balance Sheet and the Cash Flow Statement.
The Profit and Loss Statement illustrates whether the business at small scale is money making or not. This statement is a testimonial that speaks the truth about the business i.e. how the business is going on and further covers certain time period, either quarterly or monthly.
While the Balance Sheet shows the worth of the business. It is the statement which lists all the liabilities as well as assets of the business at a specific point of time.
The Cash Flow Statement gives an idea regarding the future cash balance of the business at small scale. It is the statement that covers the upcoming period of time and thereby predicts the future capital requirements of the small business enterprise prior to the necessity actually arises.
There are two prime methods of Small business accounting including the Cash Basis method and the Accrual Method.
In Cash Basis accounting method the bill payments are acknowledged as expenses and cash receipts are acknowledged as income. Vast majority of the small business proprietors' use this business accounting method since it is easy to understand as well as implement. In this method the entry of revenue in accounts do not depends upon the actual compilation of cash.
At any time when the product or service is sold, the transaction is recorded within the accounts as accounts receivable, even in the case if the client has not given the price. When the revenue actually is realized then the account receivable gets converts into cash in the recorded accounts. Likewise, if any overhead incurred by the small business enterprise then it is recorded in the form of expenses in accounts even in the case when the bills are cleared much later. Typically, the small business possessors that are engaged in the manufacturing business use the accrual method of business accounting.
The accrual method of business accounting includes some important issues about the Small Business Accounting, which includes tax liability issue (pay roll tax, income tax), maintaining the separate business transactions, internal control and the quarterly returns. In addition, the bank account reconciliation and the employee benefits policy are few other issues included in accrual method of business accounting. Consideration of all the things is very essential for a successful and a faultless business counting.
About the Author:
Alvis Brazma gives advice to business owners about how to manage their business efficiently without any hassles. To know more about accounting outsourcing, bookkeeping help, Small business accounting, real estate accounting visit www.impacctusa.com
Article Source: ArticlesBase.com
Computer Maintenance - Can You Afford To Offer A Fixed Price?
Computer maintenance contracts are one area of your business where you may want to consider using a price-fixed model. Time and materials pricing is almost always going to be better for you, but many clients respond well to fixed price computer maintenance contracts.
So, if you insist on doing a price-fixed computer maintenance agreement, there are some items you must make sure you cover off. You want to protect yourself as much as possible and the only way to do that is to write up a good and tight computer maintenance agreement.
If you don't have tight provisions, the well-intentioned and even well-trained internal computer guru (the guy you set up as the go-to guy in your absence) will make mistakes. This guy will cause you to come out to do some computer maintenance on things you didn't bargain for. You don't want to be spending too much time fixing things that shouldn't have been broken in the first place.
You can't afford to take that risk, and this is why your computer maintenance agreement must be solid. Here are some issues to consider when drafting a fixed price agreement for computer maintenance:
Will training be included? Are you responsible if an ASP goes down? Are you responsible for expansion as the company grows? Are you responsible if they get hit by a fire or flood? Are you responsible for computer maintenance if someone hacks into their system? Are you responsible for ISP or phone company outages or issues with the web and/or email hosting companies? Does your computer maintenance agreement cover issues arising from office politics or crossfire? Trust us, this happens! Does your computer maintenance cover patches, updates and upgrades? What happens if there’s pirated software? Have you built in computer maintenance time to cover user error or even negligence on the part of users or the guru? What happens if there’s internal sabotage, theft, or unauthorized software downloads? Are you taking into account viruses and worms in the computer maintenance agreement?
Bottom Line on Computer Maintenance Before considering offering price-fixed computer maintenance, you have to think about all these issues. If you don't cover off the contingencies, clients that have fixed price computer maintenance agreements will shift every burden under the sun to you. You can't afford to absorb those costs so think long and hard about offering price fixed computer maintenance.
Copyright MMI-MMVII, Computer Consultants Secrets. All Worldwide Rights Reserved. {Attention Publishers: Live hyperlink in author resource box required for copyright compliance}
About the Author:
Joshua Feinberg helps computer consultants get more steady, high-paying clients. Learn how you can too. Sign-up now for Joshua's free Computer Consultants Secrets audio training at http://www.ComputerConsultantsSecrets.com
Article Source: Amazines.com
As a small business owner, you are most likely going to incur some expenses related to the promotion of your business. Generally, most of the expenses you incur are deductible either as advertising expense or as some other expense. Some expenses are not deductible. In any case, the Internal Revenue Service requires that your expenses be ordinary and necessary to the operation of your business in order to be deductible.
There are typically three types of expenses that are considered advertising for tax purposes: ordinary advertising expenses, public relations expenses, and promotional activities.
Ordinary advertising expenses include a wide range of items including, but not limited to, business cards, print advertisements, radio or television advertisements, yellow page advertisements, Internet advertising and billboards. The cost of maintaining your website is most likely fully tax deductible but whether or not it falls under advertising expense for tax purposes will depend on your individual website. Some websites are designed to promote the business while others are essentially the operations of the business (for example, Amazon.com)
The second major type of advertising expense that your business may incur is public relations expenses or expenses that are designed to promote goodwill toward your business. Examples of this would be the distribution of samples to clients or the sponsorship of a Little League team or community softball team.
Promotional activities can include things such prizes and contests for your clients. For example, if you hold a monthly drawing for your clients and the monthly winner receives gift certificates to a local restaurant, the cost of the promotion and the cost of the gift certificates can be deducted as advertising expenses. If as part of a promotion, you provide free food or drinks to the general public, you are permitted to deduct 100% of these costs as advertising expenses – they are not subject to the 50% limitation on meals and entertainment expenses.
Now it’s time for the bad news – what is not deductible. Generally, any type of lobbying expense is not deductible in amounts in excess of $2,000 in a given tax year. These include expenses that were incurred in connection with or against a particular political campaign and expenses incurred in the attempt to influence the public about elections or legislative matters. There are also exceptions for expenses that influence local councils and boards to allow for the tax deduction.
Where many taxpayers get into trouble are in areas that are both personal and business in nature. Just because an expense appears to be both personal and business in nature does not mean that it is not deductible. If you invite a large number of clients to your Annual Client Appreciation Cruise on the lake, these expenses are likely to be tax deductible. If you invite the same people on a similar cruise but it happens to also be your daughters wedding reception, it will not be tax deductible.
In order to support your deduction, be sure to maintain a copy of the invoice and your proof of payment. It is also a good idea to save a copy of the advertisement. If you have any questions about a grey area, be sure to contact your tax advisor for clarification.
About the Author:
Chad Bordeaux is a Certified Public Accountant residing in Lake Wylie, SC - just outside of Charlotte, NC. He has a wide range of experience through his years in corporate accounting and is now a partner with Bordeaux & Bordeaux, CPAs, PA. You can visit his websites at http://www.yourcpapartners.com or http://www.redwolfpayroll.com
Article Source: ArticlesBase.com
Using Credit Cards for Business Expenses
One of the easiest ways to track your money when you own a business is by using credit cards for business transactions. This is because many credit card companies offer business users a detailed monthly statement that automatically categorizes your transactions. This is a great and easy way to see where your money is going each month and can help you cut cost in areas that you maybe over spending. How do you get such a great tool for business owners? You just need to pick a card and apply.
As the business owner you need to spend some time and see what cards are available for business owners, and what perks actually come with the cards. A great place to start is by going to the internet and finding a site that allows you the opportunity to get comparisons of the major credit cards available. This lets you see everything each card offers. For example you will be able to see if the cards have any annual fees attached to them.
Also look to see what type of perks the card companies may be offering. Many of the credit cards for business have reward plans specifically tailored for the business person. For example you can find cards that offer air mile rewards which are helpful if you travel a lot for business purposes. There are other rewards available such as getting reward points when you shop at your favorite office supply store, these points can be used for free office supplies when you gain enough points.
When you have narrowed down your choice of credit cards you will need to get a few things together so you can apply. First you will need your EIN (employer identification number) this is needed to make sure that you are a legally operating company in the United States. Next you will need to know your business's sales for the previous year. You are also going to need to have your personal information ready such as your driver's license number and your social security number. This is because you are, more than likely, going to be required to guarantee the credit card personally.
Once you get the card now you can start tracking all your expenses more carefully. Make sure you keep all your receipts from your transaction as that will allow you to reconcile the monthly statements much more quickly. When you receive the detailed statement you can quickly look and find out exactly where your company is spending most of its money. This can give you a chance to trim excess spending as soon as you see it. Many credit card companies give you the choice of having these detailed statements sent monthly or quarterly and some charge a small fee for them so check that out before you apply.
Having a credit card is a necessity for any business owner as many transactions require a credit such as buying things online, making airline reservations, or renting a car. When you use credit cards for business expenses you will also be able to track them more cost effectively.
About the Author:
Craig Thornburrow is an acknowledged expert in his field. You can get more free advice on a business credit card application and credit card for small business at http://www.businesscreditcardgroup.com
Article Source: ArticlesBase.com
Learn How To Price Your Products & Services
by Jeff Casmer
Some businesses don't have to worry about pricing because there is a market price for their goods or services that can't be modified, such as the price of developing a role of 35-mm color film at a Photo franchise shop, for example. But most businesses have to decide how to price their goods or service and whether it will be lower, the same as, or higher than the market price.
The price you can charge above what is needed to cover overhead is usually not a matter of supply and demand, although traditional economists might try to tell you otherwise. For most businesses, the price charged determines the type of client the business will have, not the number. Usually, changing the price only changes who your customers will be. A low price will attract few customers if you don't offer what they want, and a high price can bring in many if you do.
The price of your merchandise or service tells the customer a lot about what they can expect from your business. A low price often means that customers must serve themselves and that there will be no refunds or returns. In a service business, it implies amateurism and inexperience or, at best, that you're dealing with a start-up. A high price can often mean the opposite.
Prices that are out of line with those of similar businesses need to be justified to customers through added value. Customers will sort themselves out according to the value they want, and those who choose your business will do so because you meet or exceed their expectations. For example, a marketing research consultant who charges $1,000 per focus group research session will be expected to show up twenty minutes before the session to discuss it with the client. Afterwards the consultant will deliver an audio-tape and a one-page summary of the session. The same consultant charging $2,000 per session will be expected to meet with the client for at least an hour during the week before the session, to hold the session in an interview room with a two-way mirror and a video camera, and to deliver a verbal presentation and a five to ten-page summary a few weeks later. The pricing determines the client's expectations.
Pricing is subjective. You have to charge enough to make it a job worth doing - so that it pays for itself. And you can't charge so much that people are put off by the price. Pricing is not that important to a lot of people, particularly with small businesses. People are more interested in quality than price. If you're a good auto mechanic, customers will happily pay you $35 an hour, rather than risk leaving their car with someone they don't know who charges $20 an hour. Unless it gets outrageous, price will not scare people away.
There are three basic rules to follow when you are determining the price for any product or service:
(1) pricing should be easy to understand,
(2) the price should be complete, and
(3) the customer should have a reasonable number of pricing options.
The price should be complete. Not only should the customer understand how you arrived at your price, but it should also be clear to them that there aren't any surprises. Just recall for a moment the kind of pricing that charges you for every little part. "On sale now! This computer only $599 (keyboard and monitor not included)." What good is a computer without a way to put in data (keyboard) and a way to see what you're doing (monitor)? This is a form of deception, and not a very subtle one. Most of us would much rather see "This computer is only $999 (keyboard and monitor included)." It instills a much higher level of trust.
Last but not least, the customer should have pricing 0ptions. On the one hand, we've just implied that you should lump the components together and tell the truth about the minimum combination that is actually usable. On the other hand, one way to give customers a reasonable number of pricing options is to break the system down into interchangeable parts. The choice is yours and you must find what works best for your business and your potential customers.
Jeff Casmer is an internet marketing consultant with career sales over $25,000,000. His "Top Ranked" Earn Money at Home Directory gives you all the information you need to start and prosper with your own Internet Home Based Business.
Article Source: BylamoArticles.com
Small Business Finance - How To Understand Expenses On The Income Statement
Expenses like income are treated differently depending on your method of accounting (cash or accrual). Cash accounting says a cost is "expensed" when you write the check to pay for it. Accrual accounting expenses the cost when the transaction occurs whether or not money is exchanged, e.g. a supplier may give you 30 days to pay your bill or you may pay your payroll/sales taxes monthly. Accrual accounting attempts to keep expenses matched up with the sale that generated it. Bills that are paid in a lump sum for the year can be accrued (spread out) each month; e.g. unemployment insurance is paid in lump sums which throws off your P&L because of the large payment.
A solution is to record the payment to the Pre-paid Expenses account within Current Assets on the Balance Sheet. You can then divide the amount by the number of months paid and then each month reduce the Pre-Paid Expenses by the smaller monthly payment and record it in the Unemployment Insurance account on your P&L.
Most of your expenses come from your checkbook register but there is a couple you will want to watch out for.
The principle portion of your loans and credit cards that you pay on your bill are not expenses. The principle portion paid should go to the liability account on the balance sheet for the loan. The interest portion of the bill is an expense. You need to look at the bill and split out the two portions.
Items that are purchased in the $500+ range (start ups and businesses with sales less than $300,000) are considered investments in the business and should be depreciated over an IRS predetermined time span. This is where tax law and Generally Accepted Accounting Principles are applied. Larger businesses are able to expense bigger ticket items. A small business puts these $500+ purchases on their balance sheet under long term assets.
Don't worry about recording depreciation monthly unless your accountant has given you a schedule. Depreciation becomes a non-cash expense and accounts for the items you put on the balance sheet above $500 earlier.
Something to watch out for with depreciation is that the new tax laws have accelerated the ability to depreciated your assets, a good thing for lowering taxes but it often leaves a small business looking like it is not re-investing in itself. Ask your accountant to run the depreciation schedule two ways, one for taxes using the acceptable accelerated depreciation and the second way using the straight line depreciation based upon the lifespan of the asset for your business books. Why is this important? Banks run ratios that use assets to determine bank ability. As for you, it will give you a better idea of when to re-invest in furniture, fixtures, and equipment.
The most difficult thing about using P&Ls is consistent coding of expenses into their appropriate accounts. If you are unsure about which accounts to use, start with the ones on the tax return you will be using; e.g. schedule C for sole proprietors.
Bruce Hunter is the CEO of CORE Magazine in Denver Colorado. CORE is the leading online source for small business startup. Visit our free online resource center now to get free access to information on small business finance.
Article Source: EzineArticles.com
Working Capital Financing - Easiest To Get, Best To
Repay
by Ronn Jones
Any business, big or small, requires a continuous
hoard of
organized finance in order to keep functioning and
grow in
future. Risks and speculations are integral parts of
any
business and successful entrepreneurs often require
funds to
back up their strategies to undertake these risks
and
speculations. In order to obtain state of the art
gears and
infrastructure, forecasting a future market trend,
relocating or
growing beyond stipulated boundaries, running
successful
promotional campaigns or simply for paying off
debts, working
capital financing provides the ultimate fluid to
business.
In present times, keeping up with the latest
technology might
often become the key to a successful business.
Acquiring hi-tech
means for business would definitely increase
productivity and
work flow and as a result provide an edge over
competition.
However, incorporating these advanced technical
features for a
business would require a considerable amount of
investment for
their installation and knowledge base. It would
become
impossible to acquire them without a capital boost.
Office environment plays a very important role in
the
productivity of a business. A nicely planned office
space would
help employees to have a psychological advantage and
thus
increase productivity. Moreover, relocation and
growth prospects
often call for businesses to set up new bases at
different
places. This would ideally mean a complete new setup
and would
definitely need some amount of capital boost.
Without a sturdy
capital, this can never take place.
Advertisements and other promotional campaigns are a
must for
any business that aims to create a long-term impact
on the minds
of its consumers. It is often said that consumer
memory is short
and hence even though any particular business might
have been
afloat for quite some time, it still requires
extensive
promotional campaigns. These campaigns are often
very expensive,
as they require to be continued over a long period
of time.
Debts come as a part and parcel of every business.
Be it a
startup or an established business, debts are bound
to occur at
some point of time. These debts require to be paid
off at
regular intervals in order to maintain goodwill and
avoid
getting over burdened. And this would ideally
require an inflow
of cash to meet these demands.
Working capital financing proves handy when it comes
to meeting
these essential business needs. There are several
benefits that
working capital financing offers to entrepreneurs.
These
finances are easily available and cash is generally
disbursed
within 72hrs of application. It does not require any
application
fee. Unlike other forms of capital finances, working
capital
finance does not require any personal guarantee or
collateral.
But most importantly, the best part of working
capital financing
is its repayment procedure. Or should we say, no
procedure at
all. Well, it does not have any fixed repayment
schedule or time
frame. Only when a sale is made, a percentage
automatically gets
deducted from the sales amount towards the repayment
of the
capital. Moreover, loyal customers are often
rewarded with
incentives and special programs. Any fund acquired
through
working capital financing can be used for any
business
purpose.
Thus pondering
working capital financing is an admirable
decision when in need of spry financing for business
wants, as it's the easiest to get
and best to repay.
About the author:
This article is written by Ronn Jones, a marketing
expert with
years of experience in branding and internet
marketing. Check
out more information on
working capital financing.
Article Source: GoArticles.com
Internet Banking - Pros And Cons For Your Business
by
Naz Daud
Many businesses now use internet
banking as they deem it to be
even safer than the traditional method. Once
suppliers' details
have been entered in correctly the payment goes
directly to
their bank account within 3 working days.
Traditional Method
With the traditional method you get to deal with
real people but
there is a lot that can go wrong. The teller might
punch in the
wrong amount or you might arrive at the wrong time
and end up
queuing.
You might run out of cheques or even forget your
chequebook at
the office when you most need it.
Once you have written a cheque and mailed it you are
relying on
the post office to deliver your mail on time and to
the right
address. They often get it wrong.
You need to wait for a statement to find out your
account
balance unless you are brave and have hours to kill
whilst you
listen to "your business is very important to us,
please hold
while we transfer you to the next available
operator."
Opening Hours
With the traditional method you are tied down to
normal working
hours. Online banking is available 7 days a week, 24
hours a day
as long as you have access to the internet.
With internet banking you cut out the middle man and
transfer
the funds directly to your supplier's bank account.
It is also
possible to access your bank statements day or night
without
having to wait weeks / months for the banks to deal
with your
request.
Speed
Bank transfers are often dealt with speedier than
traditional
banking. Some of my transactions definitely happen
quicker
through online banking. I can also access all my
accounts from
one secure site. You can check your bank statements
for any
period in the past without having to search for a
long lost file!
Offers
Some banks now offer special deals for their online
business
customers only. It is possible to get cheaper loans
with lower
setup costs, credit cards with lower transaction
charges and
applying for a loan online is also quicker.
Security
Be very careful with your login details and do not
write down
your password anywhere.
Always log out once you have finished your business
and
regularly run anti-spyware software on your
computer. Spyware
tries to monitor your usage of your computer and
collect your
personal information and use it against you.
There have been breaches of internet banking in the
past but now
online banking technology is more sophisticated and
secure.
Suitability
Internet banking might not suit you if you like to
see who you
are dealing with. If you are a "technophobe" & feel
insecure
about doing large transactions online then it is
definitely not
right for you.
On the other hand if you hate queuing, despise the
time it takes
for duplicate statements and hate being bogged down
by
traditional opening hours then the convenience of
online banking
can not be beaten.
I use a mixture of online and face to face banking.
Some things
can only be discussed face to face with my bank
manager.
About the author:
Naz Daud -
Business Opportunity & Internet Franchises and
Internet Business Directory & Business Franchises
Article Source: GoArticles.com
Most businesses operate with the idea that profitability is a natural occurrence or that the challenge of developing profitable products or services is so simple that there is never a need to review pricing processes.
Often times I hear business owners, CEOs and even CFOs touting their business success due to profitable performing products and services where I often wonder what their true understanding of pricing is as it relates to profitability.
Sure all business wants to be profitable and all business believes they are actually profitable, but there is a large percentage of businesses out there that do not understand the concept of profitable products or services.
A truly profitable product or service must at least breakeven in preparation for profitability. Understand that the most common definition of breakeven is the point at which a product or service does not win or lose.
In other words, a product or service that has the ability to breakeven actually has no loss or gain either way. We need to understand how to add the percentage of profitability onto the known breakeven number which is where we will really get our profit.
The term of breakeven is also often used in production and fabrication where one can determine the number required to be produced to breakeven.
For example, if I were a manufacturer of joist hangers, I would want to know how many joist hangers I need to produce to cover my raw materials costs otherwise known as breakeven, where all the joist hangers I produce after that known number would be profit.
Contractors are a good example here where most contractors will factor in all of the raw materials costs of each project and add what they believe is an acceptable percentage of profit.
The error here is that contractors mistakenly factor in their labor costs into what they believe is their profit margin when at the end of a project they really don't profit what they think they should because the project took too much time to complete via labor expenses.
Unfortunately for most contractors and most businesses, that perceived percentage of profit that is added to the raw material figure is in fact just a perception of what they believe to be profit.
Smaller contractors and smaller businesses that operate as sole proprietors and are in fact truly operated by one person, really don't have to worry about the actual calculation of breakeven and proper pricing as much as the other businesses.
The key to proper pricing for profit is to capture three important parts of the pricing equation. The first being direct costs. Those are costs that you pay for in order to sell what you sell.
For example, if I am a cabinet maker I will have to buy the wood, the screws, the nails, the wood glue etc in order to produce a cabinet. Those are my direct costs. Some might define this as plain old inventory.
Next I will have to factor what is known as indirect costs such as other expenses that directly relate to the production and sales of those cabinets. I can also take into consideration those expenses that I also incur as a result of delivery and installation of the finished product such as labor, fuel, parking fees, etc.
In large scale manufacturing some businesses incorporate what is known as Activity Based Costing (ABC), where every aspect of production that is involved in the production of a product is taken into account and recuperated in the price of the product.
As a small business, I do not recommend trying to recuperate every aspect of your costs where sometimes we may price our product out of range of our consumers. This process of recovering costs in the price of our product is dangerous if not managed properly.
There are only certain expenses you can recover in the price of your product without making the price of the product so high and out of reach that no one will buy your product.
For example, as the cabinet maker we do want to recover the cost of installation via labor on each cabinet installation where we cannot recover the advertising expenses that got us that client in the first place. Advertising is a normal expense of business.
If we go back to the example of producing joist hangers, we will want to recover the cost of the sheet metal along with the cost of each employee that actually works on the production of joist hanger. This is another example of Activity Based Costing.
Remember that there is a difference between direct cost and indirect costs. Direct costs are those raw materials costs and indirect costs are those expenses we spend to make the products we make.
Direct costs and indirect costs now only gives us two of the three parts needed to properly calculate pricing. Next we need to figure out our overhead costs, or our overhead percentage rate.
This part is simple where all we need to do is divide our indirect costs into our direct costs which will give us a percentage. The trick here is to capture the appropriate amount of indirect costs. Remember, indirect costs are those additional expenses that allows us to produce the products or service we offer.
Based on previous articles I have published, we should be familiar with our income statement which will give us the number we are looking for when we try to find our indirect costs. As mentioned earlier, our indirect costs are those expenses that we incur to produce our product or service.
Luis Luarca is the Managing Partner of Allectus LLC, a management consulting company helping small to mid size businesses. For an extended version of this and other articles, visit http://www.allectus.com.
Article Source: SubmitYourNewArticle.com
One of the biggest challenges for business owners in the USA and in Canada is finding and securing the right type of financing for their businesses. Traditionally, business owners flock to banks when they needed business financing. However, the majority fail to get the business loan because they did not meet the bank’s tough lending standards.
As a rule, banks require that you have an extensive and solid business plan and countless financial projections. And if you are already in business, the bank will need three years of profitable operations before they’ll consider lending you the money.
But don’t be discouraged. If you own a business that is in operation you may have another option. This option is called invoice factoring.
But invoice factoring is not for everyone. It can only be used by businesses that are already in operation and sell to commercial or government customers. However, if you qualify, invoice factoring can be a lifesaver.
If you are like most business owners, waiting 45 to 60 days to get paid by your clients can be pretty hard. Especially because you still have to pay rent, suppliers and salaries while you wait to get paid. Factoring can eliminate the wait and get you paid in little as 2 days. This gives you the necessary liquidity to pay suppliers, rent and salaries. More importantly, it gives you the liquidity to grow your business.
How does it work? Simple. The factoring company buys your invoices and pays you cash for them. They wait to get paid by your customer while you get paid up front. As opposed to business loans, invoice factoring is easy to obtain. The biggest requirement is that you do business with reputable clients.
Factoring works well with software companies, manufacturers, distributors, staffing agencies, trucking companies and many other businesses. If your business needs financing, and you work with reliable clients, be sure to consider invoice factoring as your financial solution.
Looking for a business loan alternative? We can provide you with factoring and invoice factoring financing. Please call Marco Terry at (866) 730 1922
Article Source: SubmitYourNewArticle.com
Computer repair prices are ruled by both the competition and the owner's specific needs. But in reality, consumers should not have very much control over prices. If you present the customer with choices about computer repair prices, he will feel like his needs are being better met. And a satisfied customer will bring more future business.
Choosing The Service
Most customers will enjoy being able to choose whether or not to have repair services done. But many times a simple visit you as a repair expert will end with advice to fix something, which means the consumer will need to spend more money. If you review the computer repair prices with the client and let him choose whether or not to move forward, he will feel he has control over the situation and be more likely to both accept and be happy with the service.
Choosing The Package
To give customers even more control, you should be prepared to offer them various packages. Computer repair prices might be based on an hourly rate, so you could offer your customer this option. Then offer a second deal that includes a package that covers four service visits within the year. The second might seem like a better deal to the customer, and he might take it. If neither sounds appealing to the client, try offering a parts or repairs discount to him as part of the second option.
The Key Is An Informed Decision
Honesty is the key element in computer repair prices. As a responsible professional, you must inform the client of every billing policy. Most consultants will charge for one hour of work, minimum, even if the job is only a 10-minute one. If you are out-in-the-open with your clients they know they are making informed decisions.
Your prices should be designated based on your customers' needs. Keep in mind what they will see as a good value and base your price on this idea. The complete satisfaction of your clients is what is most important, and if they think they have received a good deal, you have done your job.
Copyright MMI-MMVII, Computer Consultants Secrets. All Worldwide Rights Reserved. {Attention Publishers: Live hyperlink in author resource box required for copyright compliance}
Joshua Feinberg helps computer consultants get more steady, high-paying clients. Learn how you can too. Sign-up now for Joshua's free Computer Consultants Secrets audio training.
Article Source: EzineArticles.com
How to Calculate Your Break-Even Point and How to Use It
Easily figure out your break-even from this formula and use it to aid in making major decisions.
Definition of Break-Even
The Break-Even point in sales volume is defined as:
“That point in sales volume, or revenue, where direct costs have been recovered, fixed overhead expenses have been absorbed and where profit begins”
We can relate Break-Even Point to the information in our financial statements, particularly the Income Statement. The Income Statement should be organized into the following sections:
1. Revenue
The sum of all sales and other income net of returns and sales commissions.
2. Cost of Sales (Cost of Goods Sold)
The cost of purchases that are resold (merchandise) and/or raw materials plus the costs of labor to manufacture the product or convert it or install it or deliver it or construct it on site. These costs are also called direct or variable costs.
3. General & Administrative Costs (Overhead)
These are all the costs not directly, or easily, related to sales volume such as Advertising, Bank Charges, Computer Expenses, Insurance, Office Wages & Salaries, Officer’s Compensation, Telephone, Utilities, Depreciation, Interest, Taxes etc. These costs are also called indirect or fixed costs.
4. 1 minus 2 minus 3 = PROFIT.
Note: If your Income Statement is not organized in this fashion (called managerial accounting format), you need to have a session with your accountant and demand it be put into this format so you can manage the business better.
Once you have your financial statements and data in the right format, you can easily calculate Break-Even using the following formula as:
Break-Even Point = FC/(1-VC/S)
Where:
FC = Fixed Costs
VC = Variable Costs
S = Sales
For illustrative purposes, let’s look at an example company, Acme Specialties, that has the following data from its Income Statement:
Sales = $1,000,000
Cost of Goods Sold = $710,000
General & Admin = $215,000
Acme’s Break-Even Point (during the period indicated by the income statement) is:
Break-Even Point = FC/(1-VC/S) and
VC/S =710,000/1,000,000 = .71
1- VC/S =1 - .71 = .29
FC/(1-VC/S) =215,000/.29 = $741,379 = BEP
And the company operated at $1,000,000/741,379 = 135% of Break-Even during the period.
Break-Even can be calculated for:
A Company
A Division
A Location
A Department
A Store
A Product
A Product Line
A Service
A Day
A Week
A Month
A Year (or any other time period)
This is assuming, of course, that fixed costs can be accurately or, at least, reasonably associated with the organizers above.
Using Break-Even in Modeling
The Break-Even formula can be used as a model to estimate the effect of major decisions on the financial status of the business such as adding a new location, making a capital investment, dropping or adding a product line. Simply estimate the changes in fixed and variable costs (and sales) that result from the decision and plug them into the Break-Even formula for your company. This can also help you set goals for the new operation.
In fact, ANY significant contemplated change in your cost structure resulting from a proposed decision can be modeled to determine the effect on the company’s financial results before the decision is made. You will know what you face and are required to overcome ahead of time. You will be able to set goals based on financial facts rather than intuition only.
Robert A. Normand is Executive Director of the Institute for Small Business Management and author of "Entreprenewal!, The Six Step Recovery Program for Small Business."
Mr. Normand has served as principal management consultant for more than 100 businesses ranging from $500,000 to $50,000,000 in annual sales and has owned and operated several small businesses of his own in diverse industries.1 Mr. Normand’s small business philosophy is premised on the belief that small business management skills can be developed by busy entrepreneurs using readily available information, tools and procedures not found in business schools or formal degree programs.
Article Source: Article99.com
How Can Your Business Benefit from Accepting Credit Cards
What are the benefits of accepting credit cards for a business? If you take a look at how different merchants compete online today, the answer is obvious. With the number of consumers who prefer to shop online continuously growing accepting credit cards is the only way a business can stay on top of the competition.
It is true that there are still a large number of consumers who are skeptical about purchasing from the web for fear of fraud and identity theft. But many are also realizing the advantages of shopping online. These advantages often outweigh the risks which can be avoided by taking the correct precautionary measures before purchasing.
More and more businesses are expanding their services by creating a website where prospective customers can place their orders without hassle and submit their payments via credit cards as well. This gives everyone the opportunity to shop without leaving their homes or without getting up from their office desks. Obviously, this enormous convenience also means more sales for sellers who accept credit card payments. If you’re business isn’t one of them, then you’re letting pass a huge opportunity for your business.
Business-to-business Benefits
Individual consumers are not the only ones who benefit. Other businesses benefit from online credit card transactions as well. Many entrepreneurs today operate their businesses with the help of business credit cards. This enables them to make wholesale purchases from suppliers without the need to pay in cash. Purchasing stocks or materials is now made more convenient even for those who have a limited budget.
This kind of set-up also works well for wholesalers because it gives them the opportunity to establish a partnership with other businesses who need their products and services. Finding leads and closing business deals are now more convenient and quick since payments and transactions all take place through the net. Buy and sell business has never been easier.
In addition, business credit cards are now equipped with reward programs that benefit not only the seller but the business credit card holder as well. Purchasing goods and products can bring the business owner cash incentives, travel rewards, and other perks and privileges.
Marketing Benefits
The introduction of online payment systems also paved the way for a lot of marketing benefits. Online advertising is more cost-effective than traditional methods of marketing. For instance, promoting your business website only requires a small marketing budget. There are also free online marketing tools that a business can use without spending a cent. Furthermore, promoting a business online often brings positive results in just short span of time if done correctly.
Every business owner must therefore consider the benefits that credit card payments can bring for the business. When you take a look closer, the advantages of accepting credit cards are many and with the right management of accounts, the risks that come with owning credit cards are outnumbered.
Business Credit Card Site provides complete reviews of the best business credit cards, tips and advice and direct online application for your chosen card. Visit: BusinessCreditCardSite.com
Article Source: ArticleRich.com
Computer Repair Prices: A Complete Price
Computer repair prices are fixed before you ever start a consulting job. Be sure to think about every aspect of the work you will complete before setting computer repair prices, and that these prices include every expectation of your customer.
The Main Factor Of A Complete Price
There is nothing more irritating than finding a computer or other technology item at the right price only to find out there is something you need that is not included. This is the definition of incomplete pricing, and as a computer repair specialist, you want to avoid it. Incomplete pricing will anger your customers and make them feel cheated.
Provide Extras
When you add something special to your computer repair prices as a bonus to your customer, your customer will feel good about the services you provide. Services like a free check-up visit post-repair will make the client feel he is getting a good deal. You should also make follow-up phone calls to add to your company's reputation and feed word of mouth.
Provide Details
Even before you do any repair work you should give your client a written estimate. The estimate must include computer repair prices and exactly what is included service-wise. Any changes you make need to be brought to the client before they are implemented in order to create a good relationship and encourage future business.
Computer Repair Prices And Reassessment
You should keep reviewing computer repair prices frequently as your business continues to grow. Make sure your fees include items such as travel costs or materials, or you create those as a separate item when appropriate.
You should also consider making changes in your pricing if you ever notice customers are regularly confused.
You should address computer repair price issues even if only a few clients seem concerned. Every client is important, and all should feel they are getting a fair and honest deal. Good feedback brings good referrals, which equals future business and your company's growth.
Copyright MMI-MMVII, Computer Consultants Secrets. All Worldwide Rights Reserved. {Attention Publishers: Live hyperlink in author resource box required for copyright compliance}
Joshua Feinberg has helped thousands of computer consultants get more steady, high-paying clients. Learn how you can too. Sign-up now for Joshua's free Computer Consultants Secrets audio training at http://www.ComputerConsultantsSecrets.com/blog/
Article Source: Amazines.com
Converting accounts receivable into cash is a critical process in the development of a healthy cash flow. While booking a receivable is accomplished by a simple accounting transaction, the process of maintaining and collecting payments from your customers requires a steadfast commitment to a systematic process of Accounts Receivable Management. To more effectively convert accounts receivable into cash it's essential that the credit and collection process be highly efficient in order for you to shorten the accounts receivable cycle time.
The accounts receivable cycle starts with a sale (credit sales) which in turn creates a receivable (monies due your company), and then, ultimately converts into cash. The length of time that it takes your company to complete this cycle, from sale to accounts receivable to cash, is the collection period. The shorter the collection period, the less time cash (capital) is tied up in the business process, and thus the better for your company's cash flow.
Try to limit outstanding accounts receivable to no more than 10 to 15 days beyond your credit terms. If your credit terms are net 30 days, then the collection period should not extend beyond 45 days. Keep in mind that average collection periods do vary because of industry standards, company policies, or financial conditions of the customer. Comparing your company's actual days of collection to the average days of collection within your industry is a wise business practice. Benchmarking your actual days of collection to that of your target days of collection (no more than 10-15 days over credit terms) is also advisable.
Your company's average collection period is calculated by using an Average Collection Period Ratio. The ratio is referred to as an Activity Ratio; it measures how quickly your company converts non-cash assets to cash assets.
Average Collection Period (ACP): ACP = Accounts Receivable / (Credit Sales/365))
A high Average Collection Period implies that your company may be too liberal in extending credit to your customers and too lax in the collection process. A low number of days in your collection period could imply that your credit and collection policies are too restrictive. This restrictive position may be repressing your sales.
Accounts Receivable Turnover Ratio (ART) is an accounting measure used to quantify your company's effectiveness in extending credit, as well as, collecting its debts. This ART Ratio is considered a Liquidity Ratio; it measures the availability of cash to pay debt.
Accounts Receivable Turnover (ART): ART = Net Credit Sales / Average Accounts Receivable
A high Accounts Receivable Turnover Ratio implies that, either your company operates on a cash basis, or that its extension of credit and collection of accounts receivable is efficient. A low ART Ratio implies that your company should re-assess its credit policies in order to ensure the timely collection of monies due from the accounts receivable ledger.
A key requirement for effective Sales and Accounts Receivables management is the ability to intelligently and efficiently manage your entire credit and collection process. Greater insight into a customer's financial strength, credit history, and trends in payment patterns is paramount in reducing your exposure to bad debt. While a comprehensive collection process greatly improves your cash flow, your ability to penetrate new markets and to develop a broader customer base hinges on the ability to quickly and easily make well informed credit decisions and, to set appropriate lines of credit. Your ability to quickly convert your accounts receivable into cash is possible if you execute well- defined collection strategies.
Credit Process:
The initial requirement of an effective credit management process is to have each company that you plan to do business with, complete and sign an Application for Credit form. Your Application for Credit form should include, the "terms and conditions of sale," space for the prospective customer to provide information on company background, a list of principal owners with their percent of ownership, three to five trade credit references, and the name of their bank(s).
It is important to personally review with the prospective customer their projected product purchases - in both dollars and in units. This review helps to initially assess the amount of credit necessary to purchase the projected products. This review also helps to determine inventory requirements based on a projected sales forecast.
Collection Process:
An efficient and effective collection management process includes well defined policies and procedures that facilitate a more expedient, sale–to-cash cycle. The collection procedures require "attention to detail" and should include:
• Billing: Preparation, recording, and delivery of invoices as soon as the product/service is delivered or installed.
• Statements: Preparation, recording, and delivery of follow-up statements that indicate aging of outstanding balances.
• Accounts Receivable Aging Schedule: Preparation and distribution of an Aging Schedule that lists all of the customer accounts that have outstanding balances. These outstanding balances are then categorized into 4 categories of time: 1 to 30 days, 30 to 60 days, 60 to 90 days, and over 90 days.
• Telephone Calls: Placement of courteous and professional telephone follow-up calls to customers with past due, outstanding balances for the purpose of establishing a date of payment.
• Collection Letters: Preparation, recording, and delivery of collection letters with an urgent message that demands payment and provides details of the action that will be taken if payment is not received by a certain date.
• Recording Payments: Posting of the amount of payment to the appropriate customer account. If possible, it is advisable that the person performing the collection duties not be involved with the posting of payments.
• Deposits of Collected Funds: Preparation of the deposit ticket, along with accompanying funds, should be deposited in the bank on a timely basis.
Factoring as an Option
Very simply, factoring is short-term financing that is obtained by selling or transferring your Accounts Receivable to a third party - at a discount - in exchange for immediate cash. In most cases, the third party, a factoring company, audits your accounts receivable to determine their collect-ability. If the factoring company feels that your receivables are bona fide then, they will offer to purchase the current ones at a discount. A factoring company may also, under the right circumstances, purchase your future receivables at discount off the face value of the receivables. The percentage discount depends upon the age of the receivables, how complex the collection process will be, and how collectible they are.
Once the factoring company collects a particular receivable, they will pay you the remaining balance of that receivable's face value, less their fee. Fees vary widely from one factoring company to another. So, it is recommended that you do your due diligence before engaging the services of any particular company. Factoring fees are not insignificant when compared to the amount of interest you might pay to a commercial lender. For this reason alone, you should view factoring only as a short-term solution rather than a regular outlet for collecting your receivables.
Many businesses, that need an immediate infusion of cash in order to survive and/or to bridge their cash flow gap, could benefit from the process of factoring accounts receivable. Since failing businesses regularly turn to factoring as a last resort, factoring may be viewed by many people as a negative. Although factoring may be a great way to generate cash quickly, you should consider the perception that factoring may convey to your customers and to others in your industry. Your good judgment here should dictate if your company could benefit from the quick cash flow that factoring provides, or whether or not it would be just adding to your company's financial burdens.
Shortening the accounts receivable cycle time generates the healthy cash flow that is required to sustain your company's growth and prosperity.
Copyright 2008 Terry H. Hill: Terry H. Hill is the founder and managing partner of Legacy Associates, Inc, a business consulting and advisory services firm. A veteran chief executive, Terry works directly with business owners of privately held companies on the issues and challenges that they face in each stage of their business life cycle. To find out how he can help you take your business to the next level, visit his site at http://www.legacyai.com
To download a copy of this article, click on this link:. http://www.legacyai.com/Article_Convert_A_R.html
About the Author:
An author, speaker, and consultant, Terry H. Hill is the founder and managing partner of Legacy Associates, Inc., a business consulting and advisory services firm based in Sarasota, Florida. A veteran chief executive, Terry works directly with business owners of privately held companies on the issues and challenges that they face in each stage of their business life cycle. Terry is the author of the business desk-reference book, How to Jump Start Your Business. He hosts the Business Insights from Legacy Blog at http://blog.legacyai.com and writes a bi-monthly eNewsletter, "Business Insights from Legacy eZine."
By signing up for Business Insights from Legacy eZine at http://www.legacyai.com/Business_Insights_eZine.html you can keep abreast of the latest tips, tactics, and best business practices. You will, also, receive the free eBook, Jump Start Your Knowledge of Business.
Contact Terry by email at http://www.legacyai.com or telephone him at 941-556-1299.
Article Source: ArticlesBase.com
Every triumphant business gets expanded itself, they are not prearranged. If you believe in this saying, you cannot turn into a successful capitalist unless all the circumstances and stars are on your part only. Anyhow, a dominant business is always regimented and well-funded. Various economic experts and luminous business brains take rigorous care of all the under and over investments. The earning per share is generally high and all the human sources are provoked enough to do everything for the business and earn more than estimated for every share. This is a vision that every small and big corporates envisage.
At all times it will be a pleasant move to start functioning from the scratch – from the standpoint of a would-be businessman who is trying hard to make plans for the finances for his business plans. The very elementary difficulty that a person faces is that he does not possess the required awareness when looking for a loan or business backing. In such conditions, the commercial loans are build-up to help you. However, for that, you should hold an uncomplicated plan of what you are planning to do if funding is made accessible and how will you utilise that fund to generate big profits. This is the foremost and indisputable worry of anybody who wants to fund his or her business venture.
Many businessmen, who are not sure of themselves and even adolescent in the current market flows, lose valued opportunities because of thinking that the price of speculation is too soaring. They over disburse their precious time in snooping for an unrealistic rate of interest that is very hard for the financiers to offer. So, you should have a meticulous consciousness of the tendencies related to the market and the pervasive rates at which financiers proffer business loans, whether guaranteed or not.
A supplementary fact that you should consider when approaching for a Commercial Loan is to submit a request for a loan with complete genuineness, self-assurance, methodical groundwork and unambiguous objectives. The project plan details to be put forward at the time of commercial loan application should serve all potential points of the expected business, unremitting by facts and figures so that the financiers come to know of your well-made future plans. The commercial loans available in the market can assist you to elevate your business plan expenditures upto 60-70 percent. Similarly, the secured loans available in the market can help you out in getting a big amount of money for your business necessities.
For more information about loans: residential bridging loans , What matters the most – Business Plan or Money? , How to avoid pitfalls while clearing debts
Article Source: Amazines.com
Help Wanted - One New Customer for Growing IT Business
Every business owner needs new customers. They are constantly on the lookout for the next customer, then the next and so on.
Your computer services business is the same, you need customers. But do you need as many as you think? Maybe not.
Do you know how much each customer contributes to your business? How about how much it costs to bring in a new customer? Or to keep them after they become your customer?
It’s the classic dilemma of quantity verses quality. Would you rather have fifty customers that pay you $5000.00 per month or ten that pay you $5000.00 per month? The revenue per customer is a lot higher with the ten customers.
You make the same amount of money, but servicing fifty customers may just run you ragged!
Focus on acquiring quality customers and you’ll be amazed at how prosperous your business becomes.
High quality customers become part of your family, your inner circle. By growing your business slowly you can build lasting relationships that will benefit both parties.
I have customers that actively drum up business for me, because we have built up a relationship.
How do you create these ongoing relationships? Be selective when choosing your customers. Choose only the customers that you wish to retain long term. I’m not saying turn down business, but focus on your core business partners.
In our example we are getting $5000.00 per month from ten quality customers. If you were to add just one more of these customers per month, how much would you be making at the end of the year?
You’d almost double your income over the course of the year! How many of your friends in corporate America can do that?
_____
Secure Publications, is a San Antonio Texas publishing company specializing in "How To" books and special reports designed to enhance our quality of life.
Visit our site to get your copy of
How to Start Your Own High Profit Computer Services Business! An Essential Guide to Earning a Living as a Computer Services Entrepreneur Secure Publications or www.LULU.com/RickParrott Parrott Writing Services
Article Source: Amazines.com
Computer Repair Prices: How to Set Fees
You can set computer repair prices in many different ways. The following four methods give you an idea of how to set your fees, but ultimately you have to choose the one that works best with your personality and style.
Pricing by the Market
This type of pricing involves setting computer repair prices at whatever the customer is willing and able to pay. Using this method, fees will vary depending on the job. This method should be used carefully as many customers might feel this method of setting computer repair prices is unfair; if two customers start discussing your services, the price differences might come up.
Competitive Pricing
The second option for setting computer repair prices is basing them on the competition. If you charge a great deal more than your local competitor you should be offering a better service or product, and if you can’t prove you are, you could lose business. You should be cautious if you set your prices too much lower than your competition as well to avoid being considered a lower quality service.
Needs-Based
This way of establishing computer repair prices involves deciding how much money you either need or expect to make annually. Then determine the number of hours you will work and figure out how much you will charge hourly. The only problem with this method is that it isn’t very accurate. You can’t know how much business you will do per year, particularly if you are a new consultant.
Former Salary Plus Benefits
This type of computer repair pricing is very similar to needs-based fee establishment. To calculate this type of fee, determine your former salary and add in health care and other benefits. The total will help you arrive at your hourly rate.
Before you arrive at a decision about computer repair pricing, review the many methods. You may even want to use two of the methods together to get the best fit for you and your clients.
Copyright MMI-MMVII, Computer Consulting Blog. All Worldwide Rights Reserved. {Attention Publishers: Live hyperlink in author resource box required for copyright compliance}
Joshua Feinberg can help you get more steady, high-paying computer consulting clients. Sign-up now for Joshua’s free audio training on proven computer consulting secrets from the Computer Consulting Blog now at http://www.ComputerConsultingBlog.com
Article Source: ArticleRich.com
In this article we have identified the ten major problems which should be avoided when obtaining working capital and business cash advances based on credit card processing. As noted below, it is not necessary to accept any of these business finance difficulties.
Credit card processing and small business loan strategies are closely connected in many ways. Business owners should not overlook the substantial working capital benefits which will accrue to their business by effectively coordinating credit card factoring and processing. These benefits will increase measurably if a number of common business cash advance problems can be successfully avoided.
Even thriving small businesses frequently need more working capital than they can borrow from a bank. One of the most important commercial financing needs for any business is ensuring that short-term cash requirements are successfully met. This is frequently a difficult task.
The use of a viable business cash advance strategy has become an increasingly important business finance tool for many businesses faced with a potential short-term cash shortfall. However, as noted below there are a number of potential problems to be anticipated and avoided when businesses use credit card processing to seek working capital advances.
Most merchants have documented credit card processing activity and sales volume. This documentation of processing activity and sales volume is a financial asset, since up to $300,000 and more can typically be obtained via a business cash advance based on future sales volume.
Before employing this strategy for working capital business cash advances, businesses should realize that there are several recurring potential problems that they need to anticipate. Highlighted below are ten common credit card receivables problems to be avoided when business owners are considering this financing approach.
First, many lenders will attempt to charge closing costs. Business owners should realize that this is an unnecessary transaction cost for business cash advances when dealing with a truly reputable provider of working capital financing based on credit card factoring.
Second, many lenders for these services also charge up-front fees. This is also a transaction cost that can and should be avoided, and with the best programs there will not be any up-front fees.
Third, many programs for business cash advances have collateral requirements. For business owners seeking credit card financing, this is an unnecessary requirement and should be avoided.
Fourth, some lenders will require financial statements and tax returns for all business cash advances. Such additional documentation requirements should only be necessary for larger working capital advances.
Fifth, monthly fixed payments to repay merchant cash advances are imposed by some providers. The preferred approach is to avoid such fixed payment requirements.
Sixth, some providers impose a fixed term for repayment. This requirement to pay off the business cash advance over a fixed term should be avoided.
Seventh, many business finance programs require businesses to have at least two years of operating history to qualify for working capital business cash advances. While many business owners can meet such a requirement, a more practical standard for newer businesses is a minimum of one year in business.
Eighth, most providers of business cash advances currently require credit scores of 680 or higher. In today's difficult economic climate, this can be a challenging requirement. It is feasible to obtain this kind of working capital financing with scores around 500.
Ninth, for merchants needing larger business cash advances, it will be disappointing to learn that many programs are limited to a maximum of $25,000 to $50,000. Providers that are better capitalized for this business finance strategy will be able to accommodate an advance of $300,000 and higher.
Tenth, many providers will require 12 to 24 months of documented credit card sales of $12,000 to $25,000 or more. A more practical possibility for business owners will involve a transaction history with six months of $5,000 or more.
It is not likely that all ten of the obstacles described above will be pertinent for all business owners. Business borrowers are likely to experience several of these problems if they are considering a business cash advance that uses credit card factoring and credit card processing.
Can all ten credit card finance obstacles discussed above be avoided? There are indeed viable credit card receivables programs which avoid all of the problems described. For any business owner considering this approach to working capital financing, it is probably worth repeating that it is not necessary to accept any of these problems in order to obtain business cash advances based on future sales.
About the Author:
Learn how to avoid mistakes with commercial loans and find out about business cash management strategies - Steve Bush is a small business loans expert => AEX Commercial Finance and Working Capital Funding
Article Source: ArticlesBase.com
Recipe For Cooking Up Working Capital In Just 5
Steps
by
Jack E. Writer
Along the journey that an entrepreneur or business
person takes, especially in the early days, it can
very often be cold and lonely. Much of the initial
zest and enthusiasm of fulfilling ones dreams of
being in business for themselves can often be
dampened by the pressures of paying bills,
attempting to increase sales, adding necessary
personnel and making payroll during those periods
when there is not enough working capital to go
around.
There was always the frustration of never quite
measuring up to the requirements of traditional bank
lenders. Even referrals to the Small Business
Administration (SBA) loan programs would
yield nothing as we discovered that the SBA itself
made no loans. Instead, we found that the banks who
made loans, under authority of the SBA, actually
utilized their own underwriting
criteria which in most case was the same criteria
that they used to make non-SBA guaranteed loans. It
took Henry Ford, the founder of Ford Motor Company,
until he was forty years old
before he was able to obtain the ten thousand
dollars ($10,000) working capital that he required
to produce his first Model T. To secure this
working capital loan, Ford had put all of his
tools and production equipment up as collateral.
Prior to obtaining the working capital that he
required to launch the Ford Motor Company, Henry
Ford had gone bankrupt several times.
The profits that Ford made from the production and
sale of his first Model T was enough to allow him to
move the Model T into full production.
Further, we found that the list of family and
immediate friends was a short one. Even when it
yielded capital, it never was quite enough to meet
the needs of a growing business. So what to
do? Well, we found that we must begin to take a
closer look, from within, to see if there might be
some alternative approaches which we might take. We
will share our experience as to the approach that we
took in the hope that it might assist some
entrepreneur or business person in finding their way
along what can be a very difficult path. If not
exactly, then maybe some variation of our approach,
might be the winning approach to get you over the
hump.
Here is our Recipe For How To Cook Up Working
Capital in Just 5 Steps:
1) Buy or Create an asset
Buying An Asset
Having something to work with is key. We hereby call
this something an asset. Assets come in many
different varieties specifically tangible and
intangible assets. No matter the type, the asset
must be constructed and/or utilized so as to produce
a stream of income.
When one considers buying an asset, the issue of
capital arises again. To meet and get around this
issue, one must realize that capital comes in many
different forms, cash being only one form.
Of all of the acquisition deals in the market place
today, except those of the smallest variety, most
are not done for cash. Usually some other form of
capital is utilized alone or in combination with
other forms of capital such as: common or preferred
stock; debt in the form of bonds or notes. Thus,
move to pursue acquisition opportunities where
little or no cash is required up front. This will
allow you to get possession of the asset and its
income streams. Each can then be utilized for your
purposes with some portion of the capital
"extracted" out and returned to the seller in order
to satisfy the financial terms of the original
purchase agreement.
This pay back, can be in one lump sum or paid back
over a period of time. It is all according to what
type of agreement of purchase you are able to
negotiate. In these instances, it is better to find
a seller who is not desperate to sell for they
typically will always seek to pursue an all cash
purchaser.
Creating An Asset
Often times gaining indirect access to a product or
service, then negotiating "directly" the placement
of a sales order or contract for services with a
third party, without ever having
expended a dime of your own money, forms the basis
of creating a real asset or business with its own
income stream.
In the new information and technology age when big
companies such as Google; Yahoo; News Corp. and
others are paying tens of millions and in some cases
hundreds of millions of dollars to
acquire internet based companies. Then these
internet based companies indeed have all of the same
real value of a thirty story office building which
is constructed in your local downtown in terms of
asset value. Further, many of these internet based
companies are producing hundreds of millions of
dollars in annual revenues with the potential for
much more which is why the larger companies are
seeking to acquire them in the first place. For the
sellers of those internet companies, they are
literally receiving tens of millions of dollars in
return for their assets, which they originally
created from nothing more than thin air.
I say nothing more then thin air, but what I really
mean is the properties that they eventually sell and
become multi millionaires as a result of were
created from open source software. Open source means
the software is free and anyone has access to
utilize the software as a basis of constructing an
asset-- a business which could eventually be sold.
The only cost is time. Once such a project is
completed, equipped with an advertising and/or video
programming infrastructure, then now you have built
an asset which produces a revenue stream. With
the proliferation of the online advertising networks
and the traffic of a global internet audience,
competition in the ad market dictates that internet
property owners are paid for their ad inventories,
by the impression, click, or action amongst other
types of payment methods. In any event, ad revenues
are created and income streams are generated and all
it really cost is some time.
2) How We Did It
With BFNNetwork.com, we were able to negotiate with
a seller who would sale on terms that were in part
favorable to us. An issue of convertible; preferred
stock was utilized to get the
transaction done. The preferred stock may be
convertible into common stock of the acquiring
company; the acquired company and/or the common
stock of any of its current or future
subsidiary and/or affiliated companies.
This structure, and the financial instruments of
acquisition utilized thereof first allowed us to
acquire the asset. Then, we negotiated for ourselves
maximum flexibility in re-payment terms
by potentially being able at some point, to take the
acquiring company; any of its current or future
subsidiaries public at the appropriate time (i.e.
selling shares to the public). The cash generated
from this endeavor is then applied to pay-off and
extinguish any outstanding balances owed to the
seller.
The key here is, that we were able to acquire the
asset along with the revenue producing advertising;
product and services sales revenue and video
programming infrastructure.
3) Creating; Selling Advanced Advertising Receivable
Royalty
From my personal experience early in my professional
career, I spent several years in the oil and gas
industry as a oil & gas lease; revenue accountant.
Here, I learned the concept of assets
which produced income royalties for their lease hold
interest owners based upon both the current and
future revenues produced by the oil & gas leases.
As such, it begin to dawn on me one day that the
advertising; product and services sales revenue and
video programming advertising provided by
BFNNetwork.com, which we now owned, were
every bit income producing assets as those which I
observed at the oil & gas companies for which I
worked. As such, after more pondering and
consideration, I came to the conclusion that these
assets too could also be packaged as a royalty, and
sold.
With this realization, we then moved to sale this
royalty to a third party investment group, for $1.3
million dollars, in exchange for $1.0 million. The
discount of $300,000 dollars was to make allowance
for the sale of not just current advertising,
programming and product sales revenue, but for
"future" revenues, as well as, various expenses
incurred related to placing the royalty with the
third party investment group. The key here is, that
this transaction, on an accrual accounting
basis, allowed us to record and thereby recognize a
gross sale of $1.3 million dollars and net sales of
$1 million dollars on our income statement. Also, we
were able to immediately record a
$1 million "receivable due" on our balance sheet.
4) ChipIn - The Power Of The Internet To Organize
People and Mobilize Capital
Having packaged and sold the $1.3 million dollar
Advanced Advertising Royalty Receivable to a third
party investment group, this group was then able to
utilize the power of the internet to organize people
and mobilize "capital" at the common man or common
woman level utilizing the ChipIn technology (@
www.chipin.com). The Chipin technology global
payment gateway utilizes the PayPal payment
infrastructure. The PayPal payment infrastructure in
turn allows users to execute payment or invest by
utilizing debt and/or credit card. Thus, if you do
come across the rare potential investor who does not
have a minimum of $1.00 in cash to invest, then said
"potential" investor can become an "investor" by
placing the $1.00 payment on their credit card.
The chipin technology is the financial product
equivalent of the "social media"; "social
networking" craze which allowed the common, every
day person to network socially and get involved in
the social networking; news gathering and reporting
industry.
With the Chipin technology and its payment gateway
functionality along with the global reach of the
internet and its networking capability, the third
party investment group, was able to construct an
offering; then market, pursue and offer its
investors a premium of 20 percent (20%) on every one
(1) dollar invested. The offering was priced as
such, in order, to open the door of participation to
those who could not normally participate. The third
party investment group offered one-million trust
unit interest and set the minimum unit of
participation at: $1.00. Each $1.00 dollar invested,
returns $1.20 or a total of $1.2 million dollars.
This return when most main line
financial
institutions are offering its depositors a 5 percent
(5%) return.
In going "directly" to John and Jane Q. Public by
way of the global reach of the internet, YOU can
actively market to the public and raise amounts of
up to $1 million dollars, spread amongst an
unlimited number of investors. Maybe everyone does
not have $10 dollars, but most people have at least
$1 dollar! Whether you are able secure one (1)
investor @ $1 million dollars or 1 million investors
@ $1.00 each, what difference does it make to you,
except obviously it might require a little more
time?
You might need to chew on it a bit more, but I hope
that by now you have observed and noticed that YOU
now have the capability and "power" to raise up to
$1 million dollars, per year, without
ever having to go to the bank, except to make
deposits. When we realized the same thing, we
stopped going to the places that we use to go
essentially just wasting time, and got busy!.
Note: By default, the Chipin tool is set to a
maximum ceiling of $10,000. A such, once you
determine the amount of working capital you require,
if that amount exceeds $10,000, you will
need to contact Chipin customer service at:
http://www.chipin.com and request that the
ceiling for your "Working Capital" fund raising
event be increased. This is all handled by an email
sent to Chipin, and a return email sent back to you
when the action is completed.
5) Communicating With Your Investors
While the internet and the Chipin technology
provides you with access to an instant payment
mechanism and global reach to a whole universe of
potential investors, you will need to
communicate and provide a summary brief of the
transaction to potential investors. The purpose of
this communication is so that the potential investor
will understand the terms and parameters of the
transaction at hand so that they will move from
"potential" investors to in fact become investors.
You want to always make sure that full disclosure is
made of all material facts, terms and conditions
that the "potential" investor can make an informed
decision.
You should set this information up in such a way
that there is an internet based link whereby with a
simple click, potential investors can readily access
the relevant information they need to review and
evaluate your offering.
Providing that you do well by these investors and
make them money, they will then be positioned to
readily get on board for your next transaction. In
short, you will have accumulated a type of syndicate
list of "go to" people when you need additional
working; expansion or acquisition capital.
The below is how our third party investment group
made disclosure information available related to
their offering to investors on the global internet:
http://mlkcapitalunion.chipin.com/mlk-capital-union-series-b-1m-20-bfnn-advanced-ad-re
We then leased a block on BFNNetwork.com, to the
third party investment group, in order that they
might also market their offering to the
BFNNetwork.com audience and other visitors to
the BFNNetwork.com site. The rationale for this is
that your own audience and/or customers is the group
who is most familiar with you and your operating
assets. Thus, this group of people have a higher
probability of moving from "potential" investor, to
investor. To review how the third party investment
group implemented their offering on the BFNNetwork,
just click below, and review the right margin of the
BFNNetwork.com site at:
http://bfnnetwork.com
Reference Resource: For seekers of working capital
who may have found this "Recipe For Cooking Up
Working Capital In Just 5 Steps!" as an initial
reference, should also reference the
foundational article; "All The Working Capital You
Need, Found Right In Your Own House" at:
http://bfnnetwork.com
About the author:
Jack E. Writer is a syndicated author currently
serving as the Senior Guest Editor of BFN Network (BFNN)
at:
http://bfnnetwork.com - Mr. Writer's
Foundational, FREE e-book "All The Working Capital
That You Need, Found Right In Your Own House" at:
http://bfnnetwork.com - Mr. Writer's
copyrighted works herein are approved and available
for re-distribution, without any change nor
alteration to the author'
Article Source: GoArticles.com
Ways
To Finance Your Business
by
Bill Henthorn
There are many ways to finance your business. Your own
money
that you have saved over time is the most obvious, but
if that
is not available then other sources must be found.
Relatives and
friends could be a source for temporary funds, but
usually not
long-term loans. Reliable long-term financing of a
business is
something that all businesses face at sometime during
their
life.
Cash flow
Cash flow is without a doubt is the biggest problem that
all
businesses must face. It does not matter the size of the
company. The bigger the business, the bigger the cash
flow
problem. A growing young business is very likely to
experience
cash flow problems. The luxury of ready cash is one that
comes
with time and success for a business. In the meantime
there is a
need to get short term financing so the business can
operate. If
the owner's savings have already been tapped, then other
sources
must be found. If the owner has a good credit rating
then the
bank may consider a signature loan to the individual and
not to
the business. The bank could also give a revolving line
of
credit that is backed by real estate or stocks.
SBA
loans and factoring
Another way to get financing is to see if you can
qualify for a
SBA loan. This loan is again made to the individual and
not the
business. These are not quick to get or easy to get for
the
business borrower. Without some assets, you are not
likely to
qualify for such a loan. Further down the list of ways
to get
money for the business is to factor your account
receivables.
This can be easily done if you are selling to quality
clients.
Each factoring company has its own rules and what
invoices they
will accept for loans. These loans are limited only by
the
amount of your invoices and their quality. If all of
your jobs
are custom in nature, then you could demand a 50%
deposit on all
work you accept.
Angel financing
Another source of money is seeking out what is known as
angel
financing. This money comes from wealthy investors who
are
seeking out promising young companies that should
prosper if
they have the money that is needed. There are several
advantages
to this financing, as it does not have to be repaid
until the
company is taken public or becomes so successful that
the angel
can be bought out. When you accept an angel you in
affect take
on a partner. This is not all bad as the angel could
have
contacts to grow your business. Successful individuals
like this
cannot only bring in capital, but also business
expertise that
could help your business grow faster and with a more
solid base.
You can find these angels by looking on the Internet or
asking
bankers or brokers in your area. They exist everywhere,
but are
usually found in bigger cities.
Bring in a partner
You can advertise for a partner to come in and help you
grow
the business. There are people in every city that are
looking
for a business opportunity that have money for the right
situation. This is a longer-term answer that should be
considered only if you feel the person that you are
considering
would be someone you could live with. Do not swap a
temporary
problem for one that will be long term in its effect.
Partners
in a business are similar to partners in a marriage.
There are
good unions and bad ones. You never know for sure what
you are
getting until later.
Private personal loans can be obtained, but the
interest rate
that will be charged will be higher than what the bank
will
charge. Second mortgages on real estate are usually
rather easy
to obtain if there is sufficient equity in the property.
The
problem with all of these loans is they are made to the
owner
and not the business. If the business fails, the owner
is still
liable for the loan. When a business is very successful
the
banks and other lenders will make the loan to the
business
without the backup of the owner. But that will not be
the case
with a young growing business.
There are many options for raising money to finance a
business.
The problem with all of them is they depend on having
assets,
good credit or significant cash flow when compared with
the loan
size. There are very few options that do not tie up the
business's assets and the owner's. Few lenders will make
loans
to the business by itself. One of the few loans made to
the
business is factoring loans. Using the invoices as
collateral
for the loans makes this possible.
Private offering to friends
Another method to raise money is to make a private
offering of
stock to a small group of investors. This is easier said
than
done, but it is possible if you have the right group of
people
available. It has to be a small group or it would be
considered
a public offering and not a private investment. The
rules are
very stringent on this type of stock offering. Get good
advice
before you attempt it.
A business cannot thrive if it is under financed for
long
periods of time. This problem must be resolved and the
sooner
the better. The struggle to live within the cash flow
stream is
one that all businesses face and it can make it
extremely
difficult for the business to prosper if they are always
fighting the finance battle.
Solving this problem is worth the time and trouble, as
it will
allow the business to have some breathing room and enjoy
its
growth. All possible solutions should be explored, as
some are
more of a fit than others. Obtaining fresh capital is
always the
way to go if the payback is not onerous. Getting the
money is
always the goal, but it has to make economic sense over
the long
run. Be careful not to jump from a small fire to a big
fire that
can consume you and your business in debt.
Once the financing issue is under control, a business
owner has
the capability of growing the business in a manner that
is
sustainable. This is the goal of every business.
Financial
control is a precursor to successful growth, which can
be
carried forward into the future. When financing concerns
are put
in their place, the business will be able to grow with
fewer
problems or at least not those of a severe financial
nature.
Cash flow must always be watched and managed so the
bills can be
paid in a timely manner. Maintaining a good credit
rating is
always in the company's best interest.
Seller Financing
Up to 90% of businesses sold are financed in some way,
by
either the seller or from other outside sources. Usually
sellers
do this when a buyer has difficulty qualifying for a
conventional loan or meeting the purchase price. Read
our
article on the
seller financing basics
for more information.
Conclusions
Financing a business is never easy and a young business
faces
even more difficult problems to overcome. If the owners
have
money then the problem is fairly easy to solve. If there
are no
assets or extra money available all sorts of schemes
will need
to be played out in order to live with money short
falls.
Short-term money will need to be found from many
sources. The
ideas presented have been used by many businesses to
overcome
short-term money crunches. Surviving over time seems to
allow
the company more room. Every money crunch that is
resolved will
ease the problem for few days or even weeks. As a
business
grows, the money problems will always be there, but
maybe not as
severe in nature.
About the author:
Bill Henthorn formerly was principal broker and owner of
a
resort / commercial real estate brokerage in Honolulu
which
specialized in representing sellers in transactions up
to
$50MM.He currently serves as the marketing director of
Acquireo.com
Article Source: GoArticles.com
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