Should Your Business Pay Home Office Costs For Remote Employees?

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StrategyDriven Managing Your Finances Article |Remote Employees|Should Your Business Pay Home Office Costs For Remote Employees?The COVID-19 pandemic has forced so many businesses to adopt remote working overnight. While there are a lot of benefits to remote working and it’s much safer for everybody right now, there are some challenges for your employees.

Creating a positive working environment in the home can be difficult and expensive. But many companies aim to solve this problem by giving their employees a stipend to create their own home office.

Shopify and Twitter, for example, offered to give each remote employee $1,000 to set up their home office. This money is to be spent on things like ergonomic office desks and chairs, or new laptops. Some companies are also offering a monthly payment to help cover things like internet or phone bills.

For big companies like Twitter, this expense is manageable and it seems like a no-brainer if it makes life easier for their employees. However, it’s not so easy for small businesses and paying your employees a similar stipend will put a lot of financial strain on you, so is it really worth it?

What Are The Benefits Of Paying Home Office Costs For Your Remote Workers?

Although it is a big expense to cover, it may be the best thing for your business in the long run. If you pay this money to your employees you will notice a big increase in productivity. It’s difficult to work productively if you don’t have a comfortable, well equipped space to do it. But if you give your employees the money to buy a proper office desk and chair so they can stay comfortable and focus, they will get a lot more done.

Giving your employees some financial assistance also increases access to tech tools, which employees may not otherwise use. Expecting your employees to pay out of their own pocket for a brand new laptop is unreasonable, especially considering their utility costs are likely to increase while they are working from home. The same goes for upgrading their internet connection to accommodate video conferencing. This means that many employees will struggle to work effectively because they are using outdated tools. Giving them some money to update their tech tools will benefit them as well as the business.

You should also consider it an investment for the future because it’s likely that the business world will be changed permanently by the pandemic. Remote working is going to become far more common, and that’s good for businesses because it cuts your office costs. However, if you expect your employees to continue working remotely in the future, you need to help them get their homes set up for it.

What Are The Downsides?

The obvious downside of these payments is that they put a lot of financial strain on the business in an already difficult time. So, before you make any promises, crunch the numbers and make sure that you can afford it.

The other thing to be aware of is that employees may spend the money elsewhere. Although this is unlikely, you may decide to ask them to purchase items and then reimburse them afterwards to avoid this.

Overall, if your business can afford it, paying home office costs for your remote employees is a good idea.

What makes a good investor pitch?

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StrategyDriven Managing Your Finances Article |Investor Pitch|What makes a good investor pitch?Pitching your startup to investors is a nerve-wracking experience for everyone. Even the great business leaders of today like Elon Musk and Bill Gates have had to stand in front of a group of investors, and ask them for money.

You only have a brief window of opportunity to make that first impression and hook in your audience.

Knowing what makes a good investor pitch is a large part of the battle, so what does make a compelling investor pitch?

Research your investors

You don’t want to take a cookie-cutter approach to your pitches if you are making more than one. Do your homework on each potential set of investors. What is their investment profile like? What successes and failures have they had in the past. You want to try and remind them of the former rather than the latter.

Investors will be able to spot a generic pitch a mile away, especially if it misses the mark with its target audience.

Confidence is key

You might be a nervous wreck but confidence is a must. Not only confidence in yourself, but in your business and your ideas. Why would someone give a lot of money to someone who isn’t confident in their own ideas?

There’s a fine line between confidence and arrogance, so don’t overdo it. Invest in having your pitch deck drafted by a professional Business Plan Writer, they can help to guide you through best practices in this area. Work on your presentation skills.

Business V emotion

A successful pitch needs both style and substance. You want to excite your audience by the prospect of investing in you and back it up with the cold hard facts.

Keep it short

It’s difficult to keep the magic happening for very long. Capture their attention, build up momentum and then get out and leave them wanting more.

Take them on a journey

Craft a compelling story for potential investors. It is great for nailing down the sequence of your pitch deck and takes your investors along with you on the story of your great idea.

Focus on investor benefits

As with all successful sales campaigns, focus on the benefits, rather than the features. You need to focus on what benefits and value you’ll be bringing to them, not the costs or features.

Know your business model inside and out

You’re going to get a lot of questions thrown at you. You can’t hide behind your pitch deck, no matter how great it is.

Your business model is the center of your pitch, you need to make it sparkle. Lose the investors here and it will be very hard to get them back.

Use visual aids in your pitch deck and presentation. Use examples of where a similar model is already being used successfully.

Be clear about what you want from them

What are you looking for from your investors? Partnership? Equity share? Remind people at the outset so that no one goes through the rest of the pitch for your startup under any kind of misapprehension.

Taking Control Of Your Business Finances

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StrategyDriven Managing Your Finances Article |Business Finances|Taking Control Of Your Business FinancesIt is well-documented that the majority of new businesses fail. Cash flow is an obstacle for many aspiring entrepreneurs, and this is why taking control of business finances is so critical. If you’re preparing to launch a startup, or you’re in the early days of growing a small business, here is some advice to help you reduce risks and manage your money effectively.

Plan ahead

Your business plan should outline how you’re going to fund your company and how you’re going to monetize ideas to generate a steady income and make a profit. Whether you’re new to business, or you’ve been established for several years, it’s crucial to plan in advance. Create budgets, evaluate spending and look for ways to make savings without compromising on quality or customer service. Increasing efficiency is an excellent way to lower expenses while also increasing your profit margins. Use forecasts to influence growth plans and resist the temptation to run before you can walk. It’s wise to consider investing in expansion once you start generating profits and demand for your products or services is increasing. Until you reach this point, it’s beneficial to tread cautiously when it comes to your finances.

StrategyDriven Managing Your Finances Article |Business Finances|Taking Control Of Your Business FinancesMake budgeting simple

Budgeting is an incredibly useful tool for businesses, particularly those looking to reduce spending or save money. To make budgeting simple, make use of software and apps and keep track of expenses. Monthly web hosting enables you to pay a set fee every month, for example. You could also look into annual options. Make sure you know which payments are coming out of your accounts every month, which services you’re paying for once a year and what you’ve signed up for on an ad hoc or on-demand basis. If you have a firm grip on your expenses, this will help to prevent overspending and cash flow problems. It’s very easy to forget about payments when you have direct debits or you touch to pay via apps or instant web payments. Analyze your accounts and update or revise your list of regular payments every few months to make sure that your budget is accurate.

Invest in protection

Running a business carries risks, and none of us know what is around the corner. Even if your financial situation is rosy, you can never be too careful. Natural disasters, cybercrime, theft, incidents that affect your brand image and reputation and economic and political uncertainty can all jeopardize even the most successful, profitable businesses. Investing in protection is essential for all entrepreneurs. Make sure you have the relevant insurance and try and draw up plans and policies to minimize disruption in the event of unexpected curveballs. If you have insurance, you have an emergency fund available and you have a plan B to keep the business running smoothly, this will stand you in good stead if the waters get choppy.

Managing accounts and trying to generate profits year in, year out can be hugely challenging for business owners. One of the most important jobs to master as an entrepreneur is taking control of your finances. Plan ahead, keep a close eye on your accounts, budget and make sure you have protective measures in place.

How To Secure Business Financing After Declaring Bankruptcy

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StrategyDriven Managing Your Finances Article |Business Financing|How To Secure Business Financing After Declaring BankruptcyPitching to banks and investors to get funding for a new business is always daunting, but it’s particularly scary if you’ve already had a failed business and declared bankruptcy in the past. You can be sure that investors will do their homework and they’ll know all about it, so there’s no point trying to hide it. A lot of people assume that having a failed business in the past means that nobody will touch you but that isn’t the case. In fact, a lot of the most successful business people in the world have had failed business and declared bankruptcy before they landed on an idea that took off. Investors understand this and they are willing to take a chance on people, even if things haven’t worked out in the past. However, it is more difficult to convince them that their money is in good hands.

There are a number of concerns that investors may have and you need to address them. Firstly, they will worry about why the first business failed and whether it was down to poor management. Secondly, they will want to know about outstanding debts. If your new business is very similar to the old one, creditors may be entitled to collect debts from it, which is a big problem for investors. If your new business looks quite similar to the old one, you also need to help them understand how things will be different this time and how you will avoid another failure. Addressing all of these issues can be tough, but it’s not impossible. Here’s how to secure investment for a new business after declaring bankruptcy.

Focus On Your Business Plan

Your business plan is more important than ever if you have already had failed business ventures in the past. Any lenders will want to know exactly how you plan to spend the money that they give you and what specific steps you will take to grow the business and return their investment to them. Banks will want a clear plan for exactly how you are going to repay any loans that they give you, so it’s vital that you can prove you have thought about every tiny detail of your new business. You can find some great templates for business plans online, which will help make sure you haven’t missed out anything important and keep everything well organized. When writing your business plan, you must be specific about the numbers because this is what lenders will be really interested in, considering your previous business failures. Although you are pitching the product, it’s vital that you demonstrate a clear understanding of the finances if you want to inspire confidence in investors.

Approach Private Investors First

Although some banks will still lend to you, private investors are more likely to take a chance on your new business, so you should focus on them first. They have more control over their money than a loan approval officer has over the bank’s money, so they can make that judgment call and decide to back your business even if it doesn’t seem like a good idea on paper. You will also find that if you can secure partial investment from a private party, this drastically increases your chances of being approved for a bank loan because you are not asking for as much.

Search For A Business Partner

Having a failed business and declaring bankruptcy in the past presents two major problems; the first is that you have a terrible credit rating, which means that banks and private investors are naturally cautious about lending to you and many people will reject you immediately when they run a credit check on you. The second problem is that people will assume that you lack business skills. You tried to start a business on your own and ended up bankrupt, so the evidence would suggest that you are not capable. There are, of course, other factors involved and you should explain these to potential investors, but it’s still likely that they will have concerns about your skills as a business person.

You can address both of these issues if you search for a business partner. If you are able to find a partner with good credit, you improve your situation immediately and with them listed as co-owner of the business, your chances of getting a loan shoot up. If your business partner has a good track record and a lot of experience, that works in your favor too. The investors are a lot more confident because it’s not just you that’s running the business, you have an experienced, successful partner to help you manage the workload, meaning you’re more likely to make it work.

However, you should be very careful when choosing a business partner to work with. Find somebody that is equally as passionate about the product but, most importantly, somebody that is on the same page in terms of the future direction of the business. When you start having fundamental disagreements about where your business is headed, you’re in big trouble. You need to think about what your relative strengths and weaknesses are too so you can choose a partner that compliments your skill set. If you’re a marketing whiz but you struggle to get to grips with the accounts, there’s no sense partnering with somebody that has spent their entire career working in marketing. Instead, you need a partner that knows the financial side of business inside out.

Put More Of Your Own Money In

This one might be tricky if you are already in a tough financial position but it really helps if you can invest more of your own money. If you are willing to back the business yourself, it shows that you are confident about it and that plays well with investors. If you’re not willing to risk that much of your own money, why should they risk theirs?

If you are struggling to raise any of your own money to put in, you should consider holding off for a while. It’s not a good idea to start a business when you are in a precarious financial position because, if it doesn’t work out, you’re in serious trouble. It might be best to spend a few years restoring your credit rating and building a healthy savings account. This will reduce the risk on your part and make it easier to secure financing.

Look For Alternative Financing Options

Banks and private investors are the most common ways to finance your business, but there are alternatives you should consider if you are struggling.

Crowdfunding, for example, is a very popular way of funding a new company these days and many successful businesses have started out this way. If you didn’t already know, crowdfunding works by asking lots of people to put a small amount into a business idea, usually with the promise of a finished product or access to exclusive content once the business is up and running. This allows you to pitch your business without any financial risk and people are more likely to back you because you’re only asking for a small amount. However, crowdfunding sites have become very popular and they’re incredibly competitive. If you stand any chance of getting the required amount, you must invest time and money in creating a high quality pitch with video demonstrations of your products. If you are going to try crowdfunding, manage your expectations and remember that your product could get lost amongst the thousands of others on crowdfunding sites.

Peer to peer lending is another alternative funding source that you might want to consider. These platforms connect investors with people that are in need of loans, and many of those investors are more willing to overlook poor credit ratings. Again, you are not guaranteed to get a loan this way but many struggling business owners find that it is a good place to find potential investors.

Depending on where you live, you might also be entitled to a small business grant or loan through a scheme of some kind. These grants are created by local authorities to encourage new businesses to open in the area. If you can get a grant, you won’t need to pay it back, which is a huge bonus for a new business that doesn’t have much money. Even if you do have to pay your loan back, the interest rate will be very reasonable and some may not charge any interest at all.

A lot of people give up after their business venture fails and they are forced to declare bankruptcy. They assume that nobody will ever finance them again and it’s too much of a risk to open a new business. But if you have a great business idea, you should take a chance on it because there are still ways to secure financing. As long as you learn from the mistakes that you made the first time around, you stand a good chance of making your new business work. Just follow these tips and you can get the financing you need.

The Basics of Franchise Accounting

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StrategyDriven Managing Your Finances Article |Franchising Your Business |The Basics of Franchise AccountingOwning a franchise is an easy and affordable way of starting a new business. As a franchise owner, a lot of the heavy lifting involved in starting a business is already done for you. Franchisees can take on an already established brand and don’t have to worry about marketing themselves, as this is done by the franchise centrally.

All the franchisee needs to worry about is dealing with the day to day running of the business, which includes the accounting. Many aspects of a franchise business will be managed centrally. In particular, the costs of marketing and developing new products don’t fall on the shoulders of individual franchisees.

Franchise accounting is similar to accounting for any other type of business, although there are a few extra steps. Let’s take a look at exactly what a franchise is and how they are run and managed.

How do Franchises Work?

A franchise location is owned by an individual, the franchisee. However, the franchise as a whole is owned by a larger corporation. For example, each individual McDonalds store is owned and operated by an individual franchisee. However, McDonald’s decides what’s on the menu, how the store functions, etc. They also handle all of the marketing and other costs of developing and growing the business.

franchising makes owning and operating a business accessible to people who would otherwise be unable to. Returning to the example of McDonald’s, a franchisee may be able to open a McDonald’s franchise as the first business that they run themselves. It’s hard to envisage most people launching a startup that has the kind of name recognition that McDonald’s does, or the existing infrastructure.

With the franchising model, new locations can be opened easily and quickly. From the perspective of the larger franchise business, this makes expanding a much simpler proposition. New franchisees will bear many of the responsibilities, and some of the costs, of opening a new franchise. If the new franchisee fails, the franchising corporation hasn’t lost as much in terms of time and money as it would if it had invested fully in a new physical location.

Franchisees, on the other hand, get to open a new business with an already established customer base, marketing strategy, etc. The franchisee will have to pay the franchising business according to their contract. This can either be in the form of a percentage of the profits, or it might be a flat rate.

Role of the Franchisor

The franchisor is the larger corporation that ultimately owns all the franchises. They manage the brand and business as a whole, deciding how to market the business and how to develop the available product ranges. The franchisor also provides assistance to their franchisees as and when it is needed.

Fees and Franchise Accounting

A franchisee owns the franchise location that they run, even though the business they operate is under license from the franchisor. They are required to follow all the guidelines set out by the franchisor. If they don’t, the license can be revoked and the franchisee can end up with a location but no business to occupy it. The franchisee will be required to pay fees to the franchisor; that’s how the franchising business makes their money.

The fees a franchisee pays are used to cover a number of costs. For example, these fees allow the franchisee to use the franchisor’s trademarks, brands, products, and services. Franchisors are legally required to set out all the fees involved in being a franchisee upfront and they cannot spring unexpected charges on the franchisee at a later date.

There will be an initial fee to pay the franchisor, which serves as a kind of entry charge. There will also be some form of ongoing fee, usually a royalty fee. Proper franchise accounting requires you to be familiar with all the expected fees and charges; you won’t be able to maintain accurate accounts unless you know what deductions and fees to factor in.

Initial Fees

The initial fee is the entry fee that grants the franchisee the right to use the franchisor’s trademarks, including brand, products, services, logos, etc. And, of course, the most important thing your initial fees will pay for is the right to use the franchisor’s name. Finally, your initial fee will cover some of the costs associated with opening a new business.

For example, the franchisor will cover the costs of training staff to use their point of sale systems, as well as any other in-house sales software. Initial costs are paid as a lump sum to the franchisor. Before you pay any initial fees, it is important that you establish exactly how much business capital you will need.

Amortizing Initial Fees

When filling out a business tax return, a franchisee can deduct their initial fee from their total profits; this is known as amortizing. Amortizing is similar in nature to depreciation, except that it deals with tangible rather than abstract assets. By amortizing a fee, its cost can be spread out over several years. This makes it possible for franchisees who can’t afford to pay a lump sum to instead pay the fee gradually over the useful lifetime of tangible assets, such as trademarks.

You can amortize the fee over a relatively long period of time, paying off fractions of it annually. For example, if you amortize your initial fee over a period of 20 years, you divide the total fee by 20 to work out how much of it you will pay per annum.

Royalty Fees

Royalty fees are the main way that the franchisor makes their money. Royalty fees are a little bit like a tax that the franchisee pays on every sale. This is the cut of the profits that the franchisor gets in exchange for essentially providing the core business. In some cases, royalty fees might be specified at a flat rate. However, the majority of the time they will be paid as a percentage of sales.

Marketing Fees

Some franchisors will further charge franchisees to cover the costs of marketing. Even though individual franchisees aren’t involved in the centralized marketing efforts, they still benefit from the effects of new marketing campaigns, so it does make sense that the franchisor would want to recover some of their investment.

Both franchisors and franchisees need to understand the intricacies of franchise accounting if the arrangement is to work. A mistake in a franchisee’s bookkeeping can end up in the franchisor being paid incorrectly and can lead to a distorted image of how healthy individual franchises are. For this reason, many franchisors are now centralizing their accounting and utilizing cloud-based accounting software. This allows individual franchisees to access and update their business accounts on a daily, weekly or monthly basis.

Conclusion

Franchise accounting needs sophisticated accounting software like QuickBooks Enterprise hosting which can be accessed on Citrix Xendesktop VDI that enables accountants to work remotely for franchise-based models to work from anywhere anytime.