What Is A Net Working Capital And Why Is It Important?

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StrategyDriven Managing Your Finances Article |Net Working Capital|What Is A Net Working Capital And Why Is It Important?Many, if not most, businesses need money to develop, survive, and grow. Organizations need the right amount of cash to meet both short-term and long-term needs without high risks of ruining their businesses. Thus, a stable and sufficient net working capital should exist within these companies’ financial accounts.

Net Working Capital: A Brief Overview

Perhaps the simplest definition of net working capital is money that a business has in its bank account. It’s also the measurement of the liquidity, efficiency of operations, and overall financial health of a business entity. Therefore, if a business possesses a working capital of good standing, it can grow through various investments.

Note that it’s possible to grow the net working capital through various means. Organizations can produce additional sales, build long-term relationships with clients, and develop products and services. It’s also possible to acquire additional working capital by borrowing the cash from reliable lending corporations.

Having a lender loan the cash you need to start and maintain projects might help your company grow. You can use the acquired money to purchase equipment to streamline processes or hire additional workers to finish tasks quickly.

Calculating Net Working Capital

Always keep in mind that money is a finite resource. Hence, it would be best to learn how to calculate working capital to let you know the amount of money needed to develop, sustain, or grow business operations.

Don’t worry, as it’s not severely challenging to calculate your company’s working capital. It’s as straightforward as subtracting your business’ current liabilities from its current assets.
Your firm’s current assets may include (but not limited to) the following:

  • Current inventory
  • Cash and cash equivalent
  • Accounts receivables
  • Prepaid expenses
  • Marketable investments and securities
  • Other liquid assets

As for your current liabilities, these may include the following:

  • Accounts payables
  • Taxes
  • Accumulated expenses
  • Interest payables
  • Short-term loans

For example, a small business wants to calculate its net working capital and compiles all the data required to acquire this figure. After gathering all the necessary receipts, documents, and files, the company might find its current assets at USD$100,000. They then need to collect and calculate payables, such as taxes, loans, and other expenses. Now, it finds that the business has USD$45,000 in current liabilities. Using the formula of subtracting current liabilities from current assets, the net working capital is USD$55,000. Hence, the company could use this amount to cover operational costs and meet other short-term obligations.

It’s highly recommended for entrepreneurs to know how to calculate their company’s net working capital. The ability to be aware of your business’ income sources helps you check whether you have a steady income source to thrive and survive.

Importance Of Net Working Capital

Without a sufficient amount in one’s net working capital could lead to mild or serious issues. Avoid these concerns by looking at the various reasons why a working capital is essential in developing and maintaining a business.

  • Maintain Smooth Operations

Maintaining smooth business operations is crucial to the profitability of relatively any company. A successful business thrives on providing products or services that people want to purchase.

Providing your business with a stable and sufficient working capital helps the organization maintain smooth operations. Otherwise, you might encounter certain problems, such as the lack of funds to provide workers’ salaries.
If this scenario happens, it could lead to more serious risks. Your employees might go on strike and may not return to their working stations until you provide them with their just financial compensations.

Another problem you might run into is the lack of stable finances to continue producing goods for customers. If your sales representative tells your customers that you don’t have enough stocks for a particular item, you’re going to lose valuable sales. Furthermore, customers might opt to purchase from your competitors instead, and this scenario accounts for lost short-term and long-term sales opportunities.

  • Improve Company Earnings And Profitability

Many small businesses don’t have the financial resources available to sustain their operations and make them grow, unlike large corporations. Therefore, it might be tough to create a profit without knowing and possessing financial stability in the business’s net working capital.
If so, begin by asking yourself how you plan to handle your working capital. Using the formula mentioned above would calculate your company’s net working capital to know the budget for your short-term and long-term projects. In turn, you can figure out the company’s earning potentials and maintain profitability to access eventual growth opportunities.

  • Minimize Costs While Maximizing Returns

Knowing your company’s net working capital also helps you minimize costs while maximizing revenue potentials. It’s because knowing the figure in that aspect enables you to balance various benefits versus the costs.

For example, you might find that your organization is holding high inventory levels. Note that several benefits may come from having plenty of stock to offer to clients. That idea might not always be the most efficient solution, especially for startups and small businesses.
Excess inventory will take up valuable storage space. Hence, your company may not have enough room for other products, unless you’re willing to spend extra cash for additional storage. Furthermore, you need to add the costs of financing and insuring the inventory in case of losses. In turn, the excess stocks may lead to more costs for your organization if you can’t dispose of them soon.

It’s possible to figure out the right number of products needed for your business’ storage while satiating the needs of your loyal customers without spending too much of the company’s financial assets. You could achieve the answer to this particular concern by calculating your business’s net working capital.

  • Helps Identify And Solve Efficiency Issues

When your company has problems with the flow of funds, it might be because you may have too little money for your accounts receivables. But you might not know about this issue if you don’t know how to calculate for your firm’s net working capital.

In turn, you can identify and solve efficiency issues in your business. Identifying your organization’s working capital allows you to look at where your money is coming from and where it’s going. Thus, you can formulate plans to solve productivity issues to increase the business’ cash flow.

Conclusion

A company’s net working capital helps meet its short-term goals, which might lead to long-term solutions. Calculating the working capital and understanding its importance allows entrepreneurs to develop actionable strategies and implement projects based on their spending power.

Cleaning During The Pandemic: What Is The New Normal In Cleaning Your Business Spaces?

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StrategyDriven Managing Your Business Article |Cleaning your Business|Cleaning During The Pandemic: What Is The New Normal In Cleaning Your Business Spaces?As much as we like to think that our offices are clean, many are not. Some are just so dirty that they can cause sickness and disease, which is dangerous as the novel coronavirus or COVID-19 is still rampant. So, how do business owners keep up with the new normal, given the safety and health protocols in place by the government?

Learn what’s the new normal in cleaning business spaces by reading below.

What Is The New Normal?

The new normal is not new to the human race anymore. With crises arising ever since humans existed, they’ve brought drastic changes to the overall routine, economy, lifestyle, and even culture and traditions worldwide.

During the COVID-19 pandemic, the new normal means significant changes in how people communicate, work, and even clean business spaces. It involves implementing stricter safety and health protocols such as social distancing or maintaining at least a distance of six feet away from other people to avoid transmitting the virus.

Cleaning During The Pandemic

Now that you know the meaning of the new normal, it’s time to know the things you should know when cleaning your business spaces during the new normal.

StrategyDriven Managing Your Business Article |Cleaning your Business|Cleaning During The Pandemic: What Is The New Normal In Cleaning Your Business Spaces?1.Wash Hands And Wear Gloves Before Cleaning

Many people don’t think about this, but there are plenty of germs and bacteria on their hands when they’re doing their work. When it comes to office & commercial cleaning, wearing gloves and face masks is now highly recommended. This is now the art of the new normal when cleaning business spaces.

When wearing safety gloves, it’s important to remember that they’re meant to protect the wearer against exposure to chemicals or toxins in the environment. Gloves should be worn while touching liquids in the same way as if they were on the part of the body. It’s important to make sure that you don’t accidentally inhale them because the liquid can get trapped in your mouth, which can cause serious illnesses.

2. Disinfect Your Business Spaces

Disinfecting is not all about putting chemicals onto surfaces. You need to understand that the more times you can remove germs from your office, the better off you’ll be because the more likely you are to prevent an outbreak.

To make sure that you and your employees are safe, learning how to disinfect offices is a good thing to do. If you want to try something else, there’s always the option of hiring a professional to disinfect your office.

Here are some disinfection tips you can try:

  • Disinfect the office using a steam cleaner: If you want to know how to disinfect offices, there are several different methods. One thing that you can try is a steam cleaner.
  • Use bleach: Another great method that’ll help you learn how to disinfect offices is through bleach, which is easy to use and affordable. Many people like bleach because it can kill any viruses that come into contact with it.
  • Use hydrogen peroxide and vinegar: There are other ways to learn how to disinfect offices. One of these is by using hydrogen peroxide and vinegar. These are both great because they’re both easy to use and inexpensive.

3. Keep Everything Clean and Sanitized

The key to effectively disinfect your office during this pandemic is to keep everything clean and remove different things that may cause germs to spread. For instance, if you have many surfaces in your office that are hard and flat, make sure that you wear gloves when you wipe them down.

Make sure that you sanitize things around the restroom and the kitchen counter, too. Again, don’t forget to sanitize your handkerchiefs and towels as well.

4. Maintain Social Distancing

Even during commercial cleaning, cleaners are advised to maintain social distancing. Because of the nature of the novel coronavirus, keeping a safe distance will help isolate the virus and prevent the disease to spread.

5. Frequent Scheduled Cleaning

As you probably noticed, cleaning is now more frequently done than ever, which is now an essential aspect of the new normal.

Every room, cubicle, corner, and space used in the business establishment must be disinfected before and after use. The government has mandated routine cleaning in compliance with the quarantine and health protocols.

Conclusion

Be sure that you change your office surfaces frequently and clean them thoroughly. Keep things clean and sanitized at all times as well. And, if you really can’t avoid germs, then it’s always a good idea to take steps to prevent them from spreading from your desktops, toilets, kitchen surfaces, and other places around your office.

Learning how to disinfect offices is a great thing to do because it’ll keep you and your employees safe from the outbreak.

The Benefits of a Diverse Workforce in Business

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StrategyDriven Diversity and Inclusion Article |Diverse Workforce|The Benefits of a Diverse Workforce in BusinessThe debate over diversity in the workplace is one that has taken up acres of newsprint across the years, and which remains a hot button issue through to the present. It’s not one we’re going to solve here, but it is worth looking at some of the reasons diversity is considered to be so important. It’s not just a matter of ticking boxes, as you’ll see below.

Diversity of background brings diversity of thought

While there is nothing objectively wrong with hiring from the same talent pool each time you bring someone in, the absence of diversity can hurt a business in terms of results. If you have a team of six people, and all six grew up in the same kind of area, had the same education and the same life experiences, there’s a decent chance – though not a certainty – that they’ll think the same way about problem solving. Really, you want a Plan B, and ideally C and D too, so a range of experiences helps.

A broader conversation helps everyone learn

If done organically, the building of a diverse workforce means that people who aren’t ordinarily exposed to a certain way of thinking can have their horizons broadened. This is as true for the perceived “outsider” as it is for the “insiders”. Everyone can gain some insight into another way of doing things, and it makes a business stronger.

Over time, bias can be corrosive

It is somewhat natural that people will seek out others like them in a lot of scenarios, whether that’s two white men gravitating towards another in a mixed group, or two fans of the same singer or radio station. That can be beneficial for harmony, but if it is reinforced over years and even generations it can lead to a business that is not prepared for a changing world. The infographic below explains how diversity can boost a business, and why it is important.


Infographic Design By Ezra Coaching

How explainer videos plays important role in your startup business strategy

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In today’s scenario, videos are gaining ample popularity not just due to its excellent benefits, but also due to its affordability and effectiveness. Indeed, videos are helping businesses to hit their goals. Video marketing allows marketers to grab the visitor’s attention in a very short span of time.

By creating alluring and informative explainer videos, one can easily express almost everything and make people familiar with your business offers. Yes! With 90-sec video, you can easily add value to your business marketing and make your brand globally recognized.

Still not satisfied? You are at the right place. Through this article, I will take you through various reasons that will help you understand why 90% of the businesses are using explainer videos to complete their desired actions and achieve their business goals.

How explainer videos can help startup businesses to gain success

Let’s get started…

Generate more traffic

When we talk about startup business, then going viral is one thing that can help them improve their business productivity. And to increase web traffic, videos play a great role. A viral video will help you gain popularity and allow visitors to know how the organization can help them achieve their goals.

According to the analysis, 82% of internet traffic comes from attractive videos. If your videos are good, you can easily double your organic search traffic. Remember, the more the traffic, the higher the conversions. So, if you want to see fantastic results in your startup marketing strategy, then don’t forget to add videos in your plan.

>Improves brand awareness

Another reason why organizations are using explainer videos is to increase their visibility on the web. Increasing brand awareness is another step that can help you increase your customer base and sales. And to achieve such desires, videos help a lot!

Uploading videos on the right platform will help you raise the awareness of your brand and allow you to make the right decision at the right time. According to HubSpot, 85% of the customers always prefer watching videos from the brands.

So, if you want to streamline your startup business strategy and increase the number of sales without putting much effort and time, then start creating short and creative explainer videos.

StrategyDriven Online Marketing and Website Development Article | How explainer videos plays important role in your startup business strategy

Source: walkaroundvideos

Prefer reading- 5 Ways to incorporate an explainer video to your marketing strategy

Highly affordable and effective

No matter whether it’s a startup or a huge organization, every organization wants to generate a positive impact on their business without breaking the banks. Well! That’s where videos come into play.

The best part about the explainer video is that you don’t have to invest huge money. There are various softwares and video production companies that allow individuals to produce videos faster that are both clearer, enjoyable and affordable. So, start leveraging the power explainer video to measure the success of your business without breaking your banks.

Earn a better ROI

Videos also play a vital role when it comes to long term investment and ROI. If you are spending money on creating videos, then you can expect a huge return. Around 51% of marketers consider videos as one of the best types of content that generate huge ROI.

According to the research, 85% of the people are likely to make a purchase after watching explainer videos. So, if you want to hype up your business sales and increase conversions to generate better ROI, then start investing in videos, as video marketing has huge scope in improving the opportunities and staying competitive.

Makes the explanation easy

For a startup, explaining the product or service is not a cakewalk. But yes! With explainer videos, it is something that is possible. If you have explainer videos on your landing pages, you can explain complex products/services easily.

According to the statistics, 97% of the organizations believe that with the help of explainer videos, it becomes really easy to make people understand the concept/products/services easily. Always remember, more will be the understanding of the concept, the easier it becomes to engage the visitors and convert them into leads.

Around 69% of the people get to know about the product or services by watching effective videos. Thus, to make people better understand the concept, start using video in the best possible way. Whenever you create a video, make sure it has a proper story.

Encourage social shares

Have you ever realized whether social sharing can help you enhance your productivity? Yes! The organizations that are focusing on their social media, such as Facebook, Twitter, Youtube, etc. are able to analyze their sales and increase their productivity. And to increase the number of social shares, videos can help a lot.

According to the statistics, the organizations that are creating social videos are able to generate 1200 times more shares as compared to long formatted content and images. Always remember, the higher the number of shares, the more the revenue.

So, if you want to see better results for your startup business, then upload entertaining and effective videos on your social media and see a positive impact on your ROI.

StrategyDriven Online Marketing and Website Development Article | How explainer videos plays important role in your startup business strategy

Source: position2

Rank Better in Google Search

Almost every business wants to appear in the top searches of Google. Because if your website is ranking at the top, then the chances to attract more visitors and convert them into quality leads increase. To increase the website ranking, you can add videos in your marketing strategy.

According to the analysis, the organizations that are creating videos are 53 times more likely to show up at the top of Google. Yes! Videos can act as a core element for your marketing strategy. But, whenever you produce videos, always have your target audience in mind. It will definitely allow you to see fantastic results in a short span of time.

In a Nutshell

There are no two opinions that videos are both economic and effective parts of digital marketing. It helps both startups and huge organizations in capturing leads and escalating their business growth. Having an engaging and educational video not only helps in promoting business but also allows in building strong customer relations.

So, if you want to create real miracles and take your startup business at the next step, make the best use of explainer videos. But still, if you have any query, or want to add something in the above list, feel free to share your opinions in the comment section added below.

Creating a Conducive Work Environment

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Your employees are the backbone of the business. Even with great ideas and business plans, nothing can get done without your team. That is why providing them with a place to work that is a conducive work environment helps to ensure that they can do their work in a much more productive and effective manner. How can you create a work environment that is effective, without having to raise costs? Here are some things to think about.

StrategyDriven Managing Your People Article | Creating a Conducive Work Environment

Remove bad vibes

If there are any employees who are getting into ‘trouble’ with their coworkers on a regular basis, then they create some unnecessary stress and unnecessary tension in the workplace. This can impact more people and stop them from doing their job as they would like to. So it is important to step in as management when this kind of thing happens, to give them enough warning so they can adjust their attitude, and take steps to deal with the issues. When it comes to hiring new people, look for people who will be a good fit for the role, but also fit into the culture of the business and existing team. A mix of personality and skills is a must for new candidates.

Incorporate branding into the workspace

We all know that when employees are at work, they will also be thinking about other things, and doing some other things. They might need to take a personal call, book an appointment on their lunch break, or deal with a personal issue when getting on with their workload. Which is why having some branding in the office can make a big difference. When the theme of the business and the brand runs throughout the work space, it can spark creativity, and helps give employees a focus when working. They only have to look around and see a custom flag or brand colors on the wall to remember where they are and what they should be doing. Simple things can make a difference and help your team to work more productively.

Use technology

It is so important to look at and harness the power of technology in the workplace. It can streamline what you are already doing, and improve things like management, cash flow, and other aspects of the business that can be prone to human error. Technologies and collaboration tools so cost the business money. They also need to involve some learning, which is why some businesses can be shy to use them and embrace them as much as they could. The costs associated will pale in comparison to the benefits that can be gained, so that is an important thing to think about.

An effective and productive work environment for your team is one that is not just rewarding for your team and the business, but one that is also safe. Look for ways to make the office a safe space to be, and that can help too. People aren’t going to stay working with you if they are just working in an office space that is full of accidents that are waiting to happen.